Wed, 19 Jan 2022

TOKYO, Japan: Japan's exports grew 38 percent in April, the highest growth recorded since 2010, fueled by a growing demand for cars and electronics, led by its key markets in the U.S. and China.

The higher-than-expected increase raised hopes of the world's third-largest economy returning to a growth trajectory amid improving trade. Following a 16.1-percent rise in exports in March, economists had forecast a 30.9-percent growth for April.

The jump in exports was driven by U.S.-bound shipments of cars and car parts, and Chinese demand for chip-making equipment, Reuters reported.

"The trade data confirmed that exports were recovering steadily. Particularly car exports, which fell a lot last year, are picking up," said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute, as quoted by Reuters.

Globally, there has been a rise in demand for cars and electronics since last year, led by a recovery in the U.S. and China.

Japan's exports to China, its largest trading partner, rose 33.9 percent year-on-year in April, driven by shipments of chip-making equipment, hybrid cars, and scrap copper.

Meanwhile, its shipments to the U.S. swelled 45.1 percent in the year to April, as demand for automobiles, car parts, and ship engines revved up.

"In Japan, capital spending tends to move in sync with external demand, so an export recovery is encouraging for machinery orders and capital expenditure," said Kodama.

However, data from the Cabinet Office has shown Japan's core machinery orders, which serve as an indicator of capital spending in the coming six to nine months, rose 3.7 percent month on month in March, indicating stalling demand.

"Export growth is welcome for the Japanese economy, but that doesn't mean the whole of Japan can benefit from it," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank, according to Reuters.

"What's important now is a recovery in service-sector activity, helped by progress on coronavirus vaccinations," he added.

Emergency coronavirus curbs are also expected to weigh on consumer spending, which makes up more than half the economy, in the current quarter.

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