Japan had been waiting for new positive signs and the newest data did not disappoint, showing that country’s exports rose in March on the weak yen. Not only did the figures exceed analysts’ estimates, but they also indicated that the Prime Minister Shinzo Abe’s steps started bearing fruits. Apart from a visible increase in Japan’s exports, the country also witnessed a decrease in the trade deficit in the month of March as Japanese products were more attractive and competitive.
On the 18th of April, the Finance Ministry issued its data, indicating that country’s export advanced in March from a year earlier. More important, the exports figures for March topped an analysts’ projection due to the weak yen. According to data released by the government, Japan saw its exports surge around 1.1 percent in March on a year-on-year basis. Given a decrease of 2.9 percent recorded in February, it was a significant improvement. In addition, analysts were also surprised as they had expected a rise in Japan’s exports in March to be between 0.2 percent and 0.4 percent.
The figures on Japan's exports were patched and the regional disparities were indeed noticeable. According to data, Japan saw its exports to the United States climb as much as 7 percent in March on a year-on-year basis, while its shipments to China slumped around 2.5 percent. Not surprisingly, not too optimistic results from China were driven by the continuous territorial dispute over the Senkaku Islands. But Japan also witnessed a decrease in its exports to the European Union as they dropped around 4.7 percent in March.
Moreover, the Finance Ministry informed that the country’s trade deficit amounted to around 362.4 billion yen ($3.7 billion) in March, compared to 777.5 billion yen recorded a month earlier. The trade deficit for March was significantly higher than the 81.8 billion one noted in March 2012. However, still the Japan’s trade deficit for March was much below analysts’ estimates of 480 billion yen.
All in all, the March figures were optimistic, thus it is not surprising that business confidence advanced for a fifth consecutive month in April, according to some new reports.
Weak yen help Japan’s economy
Without a doubt, the weak yen has started bearing fruits as a slow improvement has been noted by analysts. That is positive sign as the Japan’s economy is undeniably export-reliant. Indeed, the weakness of yen has had a positive impact on the Japan’s exports. It seems that recently introduced measures do have a positive impact on the Japan's economy. But still analysts and markets are anxiously eyeing BoJ governor Haruhiko Kuroda who is widely expected to introduce idiosyncratic monetary stimulus measures aimed at prompting a much-anticipated economic recovery.
Interestingly, analysts note that Japan should keep in mind that its exports will probably not see improvement in China and the European Union in 2013. Also the weak yen may push other Asian economies to introduce their own measures aimed at supporting their exporters who have been hit by the weak yen, just to mention South Korean manufacturers such as Samsung Electronics Co.