Japan’s export slump eases, fanning recovery hopes

Published by rudy Date posted on April 22, 2009

TOKYO (AFP) – Japan’s export slump eased last month, government data showed Wednesday, raising hopes that the world’s second largest economy may be through the worst of its deepest recession since World War II.
The glimmers of optimism mirror tentative signs in other major economies, including the United States and China, that the global downturn may finally be abating, even if any recovery is unlikely to be quick, analysts said.

Japanese exports fell 45.6 percent in March from a year earlier, slowing after a record 49.4 percent decline in February, the finance ministry said.

“Exports have hit bottom,” said Richard Jerram, chief Japan economist at Macquarie Securities.

Compared with the previous month, exports actually picked up in March, he noted.

“The stage is set for a strong rebound in industrial production and exports in the second quarter of 2009,” Jerram predicted.

However, the figures were tempered by news Japan suffered a trade deficit in the fiscal year to March, the first such shortfall in almost three decades.

Hopes of a recovery have been growing since Tokyo reported earlier this month an unexpected rebound in machinery orders in February.

“The rapid worsening (seen in past months) is coming to a halt now,” said Hideyuki Araki, an economist at the Resona Research Institute.

“This development seems to be consistent with data in other countries signalling manufacturing activities are hitting a bottom.”

The government’s planned stimulus spending of 15.4 trillion yen (156 billion dollars) — about three percent of economic output — is also expected to cushion the blow of the global economic downturn.

Japan’s heavy dependence on foreign demand to drive its economy has left it vulnerable to the current slowdown, which has sent sales of its key exports cars and televisions, as well as other goods, tumbling.

The country logged a trade deficit of 725.3 billion yen in the fiscal year through March, its first such shortfall since 1980, the finance ministry said.

The economy suffered its worst performance in almost 35 years in the last quarter of 2008, contracting at an annualised pace of 12.1 percent. Analysts warn that the first quarter of 2009 could be just as bad.

The downturn has inflicted heavy losses on iconic companies such as Toyota and Sony, prompting a wave of job cuts.

In March alone the trade surplus plunged 99 percent from a year earlier to 10.96 billion yen, the government said.

But financial markets are cautiously hopeful that the global economic downturn is easing, even if rising unemployment is making life tougher for many ordinary people.

Recent data in China have raised hopes that the Asian powerhouse may be enjoying an emerging recovery, helped by a huge stimulus package.

US President Barack Obama earlier this month said he sees “glimmers of hope” of an economic revival and his Federal Reserve chief Ben Bernanke detected “green shoots” of recovery.

Many independent forecasters, however, remain cautious about the prospects of a rapid recovery in the global economy, even if exports and factory output do stabilise at the current low levels.

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