Japan’s March exports rose at the fastest pace in more than two years in a sign expanding global demand is moving the country’s slowly recovering economy into a higher gear.
Led by shipments of car parts and steel, exports rose 12% from a year ago, well ahead of the median estimate of 6.7% growth. Japan’s trade surplus with the United States narrowed, although this is unlikely to ease concern about the US adopting protectionist policies.
On Tuesday US Vice President Mike Pence said Washington wants results “in the near future” from talks it hopes will open more of Japan’s markets to U.S. goods. He spoke in Tokyo at a US-Japan economic dialogue with Japanese Finance Minister Taro Aso.
Exports to the United States rose 3.5% compared with 0.4% in the previous month, though Japan’s trade surplus with the US fell 8.1% in the month to 628.1 billion yen ($5.77 billion) as imports of liquefied natural gas and grains gained.
Exports to China rose 16.4% on year, following a 28.2% surge in February following the Lunar New Year. Shipments to Asia jumped 16.3% following a 21% surge in the previous month.
The overall trade balance came to a surplus of 614.7 billion yen versus the median estimate for 575.8 billion yen.
The next US-Japan economic dialogue will be held in Washington before year’s end, where the Trump administration is expected to press for concessions to boost exports to Japan.
Meantime, confidence among Japanese manufacturers has risen for an eighth straight month to a level not seen since before the 2008 global financial crisis, a Reuters survey found.
The monthly poll also showed confidence at service-sector firms hit a three-month high, a sign that the effects of an export-led economic recovery are spreading.
In the poll of 529 large- and mid-sized firms between April 4-17, the sentiment index for manufacturers rose one point to 26 in April, led by manufacturers of items such as food, metals and machinery. A total of 261 companies responded
It was the highest reading since August 2007, a year before the global financial crisis.
After the meeting with Pence, Finance Minister Aso flew to the US and spoke at a seminar in Columbia University on Wednesday, where he said budding signs of recovery may allow Japan to proceed with a twice-delayed sales tax hike, now scheduled for October 2019.
He added that there was no quick fix for the country’s finances, dismissing the suggestion the central bank would resort to “helicopter money” – or direct underwriting of public debt to fund government spending.
“There are various problems to such ideas. For one, it would undermine the Bank of Japan‘s independence and market confidence over monetary policy,” he said.
The only way to solve the problem is to raise taxes, cut spending and take steps to revive the economy, he added.
“The economy is likely to do well ahead of the Tokyo Olympic Games in 2020, so it will be easier to raise the sales tax,” said Aso, who was in New York ahead of this week’s meeting of the Group of 20 finance leaders in Washington, D.C.