Asia shipments help Japan's export growth stay buoyant

By Jason Clenfield  |   2008-6-26  |     NEWSPAPER EDITION

JAPAN'S exports grew at twice the pace economists estimated in May, as accelerating shipments to Asia helped the economy withstand a slump caused by falling demand from the United States and Europe.

Exports, which contributed at least half of Japan's growth in the past three quarters, rose 3.7 percent from a year earlier after climbing 3.9 percent in April, the Finance Ministry said yesterday. The gain was faster than the 1.9-percent median prediction of 18 economists surveyed by Bloomberg News.

Asia, the destination of half of Japan's goods sent abroad, supported exporters including Idemitsu Kosan Co even as the yen gained 14 percent and shipments to Europe fell for the first time in more than two years. Exports to the US declined for a ninth month.

"We expect exports to slow from here. In trend terms, it's already happening," said Hiroshi Shiraishi, an economist at Lehman Brothers Holdings Inc in Tokyo. "Looking ahead, we think Asian economies will slow because of inflation, and in the US, the fundamentals of the consumer economy are pretty bad."

The Nikkei 225 Stock Average slipped 1 percent as of 1:06pm yesterday in Tokyo on concern that the drop in US household confidence will reduce demand for the nation's cars and electronics. The yen was little changed at 107.76 per dollar.

Exports to Asia climbed 8.1 percent from a year earlier, and those to China gained 12.3 percent, led by shipments of steel, automobiles and oil products. Japan's refiners sent extra fuel to China as part of relief efforts following the May 12 earthquake.

Idemitsu Kosan, Japan's second-biggest refiner, said this month that it may double its storage and pipe capacity within the next three years to tap Asia's rising demand.