JAPAN’S exports rose at the fastest pace in seven months in September as sales to Asia picked up pace, but signs of slowing global growth may hurt the trade sector’s ability to recharge the world’s third-biggest economy and keep pressure for fresh stimulus.

    In particular, cooling growth in China and an economic chill in Europe — two key markets for Japanese exporters — are adding to pressure on the Bank of Japan (BOJ) and the government to step up policy support as the economy struggles to recover from the pain of an April sales tax hike.

    A recent run of weak data including a shocking slump in factory output prompted the government to cut its economic view Tuesday, raising speculation that it may roll out fresh stimulus steps when it makes a decision on the second-stage of the sales tax hike in December.

    In that context, yesterday’s trade figures should be welcome news to Tokyo. The 6.9 percent annual increase in exports in September was roughly in line with a 6.8 percent gain expected by economists, and the biggest rise since February. It followed a 1.3 percent year-on-year decline in August.

    Exports to Asia, which accounts for more than half of Japanese shipments, rose 8.1 percent in September from a year ago due to growing demand for electronic parts and metals from China and Vietnam, the data showed.

    Sales to China also gained an annual 8.8 percent, but there are worries as growth in Asia’s economic powerhouse slowed to its weakest since the global financial crisis in the third quarter.

    Exports have disappointed for much of this year because many companies have shifted production overseas, tempering the benefits of weaker yen. Now, renewed turbulence in the global markets on signs of a slowing world economy could snuff out any gains in exports, hurt Japan’s economy and complicate the planned sales tax hike next year.

    “Exports staged a rebound but they are still lacking momentum as a trend, as Japanese carmakers and other firms are shifting production abroad and global growth remains moderate,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

    “Exports have not been growing the way the BOJ expected this year and domestic demand is weak, so the BOJ will cut its growth projections at the end of this month,” he said.

    “The bank may still insist that the economy is on track to meet its inflation goal, but I see it will come under pressure for fresh stimulus sooner or later.”

    Still, the BOJ is expected to hold off from launching a fresh round of stimulus in the near term, hoping that domestic consumption will steadily pick up and help spur growth.

    (SD-Agencies)