Japan's Trade Surplus Widens 62.7% in September

Japan's trade surplus widened in September as exports to China and Europe grew and imports fell for the first time in more than three years.

The surplus rose 62.7 percent to 1.64 trillion yen ($14.2 billion) from a year earlier, the Finance Ministry said in Tokyo today. The median estimate of 40 economists surveyed by Bloomberg News was for the gap to increase to 1.48 trillion yen.

Sales of Japanese-made goods in Asia's emerging markets are making up for cooling exports to the U.S., where the worst housing recession since 1991 is discouraging consumer spending. A report tomorrow will probably show China's economy grew more than 11 percent for a third straight quarter, economists predict.

``Shipments to the U.S. and Europe have been slowing but Asia is expected to pull its weight,'' Junko Sakuyama, a senior economist at Dai-Ichi Life Research Institute in Tokyo, said before the report was released. ``Thanks to Asian demand, exports will stay solid even if the pace of growth moderates.''

Exports rose 6.5 percent last month, less than the 8.1 percent estimated by economists and 14.5 percent in August. Imports fell 3.2 percent, the first drop since February 2004, after gaining 5.8 percent in August. Analysts expected a 0.9 percent increase last month.

The yen traded at 114.91 per dollar at 9:06 a.m. in Tokyo from 114.83 before the report was published.

Shipments surged in August as automakers including Toyota Motor Corp. sent more cars to the U.S. and Europe to make up for a disruption in supplies in July because of an earthquake.

U.S. Slowdown

Exports to the U.S. fell, the Finance Ministry said.

The collapse of the U.S. subprime mortgage market prompted the International Monetary Fund to cut its growth forecasts for the world's largest economy last week. The fund now expects the U.S. to expand 1.9 percent in 2008, less than the 2.8 percent it estimated in July. In contrast, the IMF raised its forecasts for emerging Asian economies as China's expansion accelerates.

China's gross domestic product expanded 11.5 percent in the three months to Sept. 30 from a year earlier, according to the median estimate of 26 economists surveyed by Bloomberg News.

``Exports to the U.S. are stalling, but given that emerging markets, led by China, continue to expand, exports are actually on an upward trend,'' Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs in Tokyo, wrote in a report on Oct. 22. He predicted growth in shipments would slow to 9 percent.

China, India

Manufacturers have turned to China and India, the fastest growing major economies, to shield them from a slowdown in the U.S., where a fifth of Japan's exports are sent. Honda Motor Co., the country's second-largest automaker, increased its sales of cars in China 39 percent last month. They've climbed 32 percent since the beginning of the year.

Reports in the past month suggest that Japan's economy is rebounding from a slump in the second quarter. Industrial production rose to a record in August and household spending climbed, fueled by the first increase in wages this year.

``People are so focused on the subprime issue that they're forgetting that demand from emerging markets has also been much stronger than expected,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Export demand has been recovering.''



10/23/2007 6:23:36 PM