- Takeshi Minami, chief economist at Norinchukin Research Institute
Japan exports rebounded in July following two consecutive declines in a tentative sign that overseas demand started to strengthen, which could fuel hopes that exports could offset a drop in consumer spending. Overseas shipments surged 3.9% from the previous year to support the Japanese economy, which contracted last quarter the most since the devastating earthquake in 2011. Growth in exports was driven by increased shipments of cars to Europe, metal processing machinery and items such as liquid crystal displays. Exports to Asia climbed 3.4% and were up 2.1% to the U.S. in July, after shipments to both regions declined in May and June. To the E.U., exports soared 10.2% , a 14th consecutive monthly increase. Japan's exports have struggled with weak demand in Asia for much of this year and a growing shift in production overseas, which has disappointed officials in the BOJ and the government. The rebound in shipments may help Prime Minister Shinzo Abe to raise the sales tax again after boosting it to 8% in April. The economy is forecast to expand an annualized 2.9% this quarter after contracting 6.8% in the April-June period, as consumers and businesses cut spending after the tax increase.
Japan's imports rose 2.3% in the year to July, compared with a median forecast for a 1.7% annual decline, as energy imports grew. That brought the trade balance to a deficit of 964 billion yen.
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