JAPAN’S exports rose in July for the first time in three months in a tentative sign that demand overseas is starting to recover, which could raise hopes that exports can offset a slump in consumer spending.

    The export data will be a relief for the Bank of Japan (BOJ), which has predicated its economic growth and inflation forecasts on a rapid rise in exports as part of the government’s “Abenomics” plan to energize the Japanese economy.

    The 3.9 percent annual rise in July was roughly in line with a 3.8 percent increase expected by economists in a Reuters poll. It followed a revised 1.9 percent decline in the year to June.

    Growth in exports was driven by increased shipments of automobiles and electric machinery, the data showed.

    “The data shows exports are recovering moderately as a trend, so external demand may offset some of the weakness in domestic demand ahead,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

    “But export growth is unlikely to accelerate much from here. Europe’s economy lacks momentum and this will weigh on growth of Japan’s big Asian export markets like China,” he said.

    Japan’s exports have struggled for much of this year due to weak demand in Asia, so evidence of an export recovery suggests the economy may rebound from a sales tax hike in April, which would ease pressure on policymakers to take steps to support growth.

    Exports to Asia, which account for more than half of Japan’s total exports, rose 3.4 percent in July from a year ago as automobile shipments grew, the country’s finance ministry data showed yesterday, marking the first increase in three months. Exports to China, another important market for Japan, were up 2.6 percent in July, while shipments to the United States rose an annual 2.1 percent.

    Japan’s imports rose 2.3 percent in the year to July, compared with a median forecast for a 1.7 percent annual decline, as energy imports grew. That brought the trade balance to a deficit of 964 billion yen (US$9.4 billion).

    The economy shrank an annualized 6.8 percent in April-June, its biggest slump since the March 2011 earthquake, stoking fears that consumer spending had weakened more than expected after the April sales tax hike.

    Exports also fell in the second quarter, showing that both domestic and external demand weakened.

    (SD-Agencies)