By Hideyuki Sano
TOKYO, Nov 25 (Reuters) - Japan's exports grew in October thanks to robust shipments to Asia, suggesting that a strong recovery in the region will support the country's export-driven economy for the rest of this year.
Declines in exports also slowed compared with a year ago, easing concerns among some economists that Japan's economy will go through a double dip.
China's economy is still powering ahead, and there are signs of recovery in domestic demand in other important markets such as the United States, that should support demand for Japan's goods, economists say.
Still, Japan's imports have been slow to improve, showing domestic consumption is structurally weak because of an ageing population and that the economy is vulnerable to shocks.
"Japan's exports have got off to a good start in October after solid growth in the third quarter, led by shipments of cars and electronics as well as robust demand for steel and other materials from China," said Tatsushi Shikano, a senior economist at Mitsubishi UFJ Securities in Tokyo.
"Japan's recovery will continue to be backed by exports and is unlikely to suffer a double dip as some market players fear."
The real exports index, compiled by the Bank of Japan, rose 3.3 percent to its highest level since November last year, following a 5.5 percent climb in September.
Compared with a year ago, Japan's exports fell 23.2 percent in October, less than a median market forecast for a 26.5 percent decline and slower than a 30.6 percent annual decline the previous month, the Finance Ministry data showed.
For a graphic on the data, click on:
http://r.reuters.com/dac53g
Exports to Asia, which account for more than a half of Japan's total shipments, fell 15.0 percent in October from a year ago, the slowest pace of decline in one year.
Shipments to the United States fell 27.6 percent in October from September, slower than a 33.9 percent annual decline the previous month.
The recovery is broadening to goods that had been slow to pick up, such as general machinery.
The rebound in exports has been a major driving force behind Japan's recovery. The economy grew 1.2 percent in the three months to September after a revised 0.7 percent expansion in the preceding quarter.
For a graphic on Japan's exports and industrial output click:
http://link.reuters.com/hen53g
Analysts expect Japan's economic growth to slow in the coming quarters as the effect of domestic stimulus spending tapers off, a Reuters poll found. Signs of strength in Japan's exports, particularly to China, could offset weakness in its domestic consumption.
"If the recovery momentum in exports continues in January-March, it might help the Japanese economy avoid a slowdown to zero or minus growth in the period by offsetting the negative effects of public spending cuts and stagnant consumption," said Naoki Iizuka, a senior economist at Mizuho Securities in Tokyo.
One risk is the yen's recent rise against the dollar, which makes Japanese goods more expensive overseas.
The yen traded at 88.53 yen per dollar on Wednesday, not far from a 13-year high of 87.10 per dollar hit in January, helping to push Nikkei share average to a four-month low this week.
(Editing by Joseph Radford)
((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827; Reuters Messaging: hideyuki.sano.reuters.com@reuters.net)) Keywords: JAPAN ECONOMY/
(If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
