JAPAN’S exports suffered their first annual decline in 15 months in May as external demand remained soft despite a recovery in advanced economies, suggesting a bumpy ride for the world’s third-largest economy.

    Exports to Asia and the United States fell during the month, Ministry of Finance (MOF) data released yesterday showed, which is likely to heighten concerns about Japan’s growth outlook at a time when consumption is being crimped by a national sales tax increase.

    Exports fell 2.7 percent in the year to May, the MOF data showed, compared with a 1.2 percent drop seen by economists and a 5.1 percent rise in April. On a seasonally adjusted basis, exports fell 1.2 percent in May from the prior month.

    The data will be a worry for Bank of Japan (BOJ) Governor Haruhiko Kuroda who last week said the timing of export recovery may have been delayed.

    The BOJ is counting on exports growth to partially offset the impact of a sales tax hike to 8 percent from 5 percent in April, and sees shipments eventually picking up as overseas economies, mainly advanced economies, recover.

    However, the recent signs suggest that external demand is slow to pick up.

    “The mechanism where exports drive activity in the manufacturing sector is not working, so this cannot offset the impact from the sales tax hike,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.

    “The U.S. economy is improving, so Japan’s exports will eventually recover, but it will take more time.”

    Exports to the United States decreased 2.8 percent, while shipments to China rose 0.4 percent in the year to May.

    Exports to Asia, which account for more than half of Japan’s total exports, fell 3.4 percent in May from a year earlier. (SD-Agencies)