Japan exports jump in March but trade friction fears cloud outlook

Newly manufactured vehicles awaiting export at a port in Yokohama, Japan.
Newly manufactured vehicles awaiting export at a port in Yokohama, Japan.PHOTO: REUTERS

TOKYO (REUTERS) - Japan's exports rose in March at the fastest pace in more than two years as increased shipments of car parts and steel signalled that expanding overseas demand could help boost the country's notoriously slow economic growth.

Exports rose 12.0 per cent in March from a year ago, more than the median estimate of 6.7 per cent annual growth. The data also showed Japan's trade surplus with the United States narrowed, although this development is unlikely to wholly ease concerns about US trade policy.

Japan's exports are expected to continue rising as global economic growth gains momentum, but concerns about US President Donald Trump's pledges to adopt more protectionist trade policies cloud the outlook for Japan's trade.

Exports to the United States rose 3.5 per cent in March from a year ago due to higher shipments of car parts. That compares with a 0.4 per cent annual increase in U.S.-bound exports in the previous month.

Japan's trade surplus with the United States fell 8.1 per cent in March from a year ago to 628.1 billion yen (S$8.06 billion) on rising imports of liquefied natural gas and grains.

Exports to China rose 16.4 per cent in March from a year ago, following a 28.2 per cent annual surge in exports in February following the Lunar New Year.

Japan's exports to Asia rose 16.3 per cent year-on-year in March after rising an annual 21.0 per cent in the previous month.

The overall trade balance came to a surplus of 614.7 billion yen versus the median estimate for a 575.8 billion yen surplus.

On Tuesday US Vice President Mike Pence put Japan on notice that Washington wants results "in the near future" from talks it hopes will open Japan's markets to US goods.

Pence was speaking in Tokyo where he attended the first US-Japan economic dialogue with Japanese Deputy Prime Minister Taro Aso.

The next meeting will be held in Washington before year's end, where the Trump administration could press for concessions on trade that could increase US exports to Japan.