Japanese exports accelerated sharply in November, yet again pointing to growing momentum in the world’s third-biggest economy.
Data from the Ministry of Finance showed exports grew 16.2 per cent in the year to November, beating a 14.6 per cent gain expected by economists in a Reuters poll.
There was just one catch: inflation remained stubbornly low and well off the central bank’s 2.0 per cent target, reports Reuters.
“Inflation expectation is in a gradual recovery trend, but a gap between firm economic indicators and weak price indexes remains wide open,” said Yuichiro Nagai, economist at Barclays Securities.
Indeed, a BOJ survey on Monday showed companies’ inflation expectations heightened only a touch in December from three months ago, despite a tight labour market and business confidence at over a decade high.
The persistently low inflation - with core prices running at an annual pace of 0.8 per cent - was also hard to square off with the robust performance of Japan Inc, which has benefited from booming exports thanks to upbeat global demand.
Economists expect brisk Asia-bound shipments of electronics and solid capital investment in advanced economies will underpin Japan’s export performance in coming months.
“The global economic outlook by IMF and OECD suggests the world economy will remain resilient for the time being, which will provide favourable export conditions,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
That upbeat outlook was highlighted in the BOJ’s tankan survey on business sentiment last week, which showed big manufacturers’ optimism hit an 11-year high.
Many economists, however, are skeptical that consumer price gains will keep up with growth in overall economic activity.
Shipments to Asia, which account for more than half of Japan’s exports, grew 20.4 per cent in the year to November to 3.89 trillion yen, the record amount.
Exports to the United States rose 13.0 per cent in the year to November, led by cars and excavators, following a 7.1 per cent gain in the previous month.