Japan's Export Growth Unexpectedly Quickens to 8.7% (Update2)

By Jason Clenfield


March 26 (Bloomberg) -- Japan's export growth unexpectedly accelerated in February as demand from emerging markets helped automakers ride out the U.S. slump.

Exports, which contributed more than half of the economy's expansion last quarter, climbed 8.7 percent from a year earlier after increasing 7.6 percent in January, the Finance Ministry said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg News was for a 7.5 percent gain.

Consumers in emerging economies are helping Hino Motors Ltd. and Honda Motor Co. make up for waning demand in the U.S., Japan's largest market. The resilience of the nation's shipments overseas even as the U.S. heads for a recession may mean Japan's slowdown won't be as pronounced as analysts have predicted.

``This is an impressively strong number and we may need to reassess the outlook for exports,'' said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. ``It looks like exports are less sensitive to the U.S. slowdown than expected.''

Imports increased 10.1 percent, and the trade surplus widened 0.9 percent to 969.9 billion yen ($9.7 billion), the ministry said.

The yen rose to 99.74 per dollar at 9:33 a.m. in Tokyo from 100.07 before the report was published.

Export growth to Asia quickened to 13.9 percent in February from 8.l percent a month earlier, the report showed. Shipments to China rose 14.9 percent, and sales to Europe gained 7.2 percent. Exports to the U.S., meanwhile, slid 6 percent from a year earlier, a sixth monthly decline.

Global Demand

``Global demand so far has held up far better than people have hoped,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. ``We've got the Chinese and the Russians to thank for that. They've got money and they're spending it.''

Japan's sales to Russia doubled in the past two years. Those to China expanded 45 percent. That growth has reduced the importance of the U.S., which accounted for only 20 percent of total exports last year, compared with about 30 percent in 2000.

Hino Motors, Japan's largest maker of heavy-duty trucks, said yesterday operating profit for the year ending March 31 probably beat its own forecast because of higher sales in Indonesia and Latin America.

The International Monetary Fund forecasts that, despite the slower U.S. growth, the global economy will expand 4.1 percent this year, above the average 3.7 percent over the past quarter century. Emerging markets including China and India aren't only boosting world growth, they're also creating new customers for other Asian exporters.

South Korea, Taiwan

South Korea's exports climbed 20 percent in February, as Samsung Electronics Co. and Hyundai Heavy Industries Co. sold more mobile phones and ships to China and the Middle East. Orders for Taiwanese exports, an indicator of shipments over the next 90 days, rose 18 percent.

``If Korea and Taiwan can do it, why can't Japan?'' Action Economics' Cohen said.

Some companies are wary that the yen's rise against the dollar may crimp exporter earnings in coming months. Japan's currency has gained 7.1 percent in the past month, making it the best performer of 10 major currencies tracked by Bloomberg.

Toyota Motor Corp., Japan's biggest carmaker, last week said the company may miss its sales target this year because the yen's gains make its cars more expensive in the U.S. Canon Inc., the nation's biggest camera maker, forecasts profit growth in 2008 will be the slowest in nine years, as U.S. consumers tighten their belts.

Waning demand in the U.S, the world's biggest economy, may also eventually take its toll on the emerging markets where Japan ships about half its goods, according to Economic and Fiscal Policy Minister Hiroko Ota.

``We need to watch the depth and duration of the U.S. slowdown and the effect it will have on the corporate sector,'' she said yesterday.