Japan trade surplus logs first rise in 20 months

TOKYO: Japan's trade surplus posted the first rise in 20 months in June, official data showed Thursday, reinforcing a view that the world's second largest economy is crawling towards a recovery.

The surplus jumped nearly five-fold in June from a year earlier to 508.0 billion yen (5.4 billion dollars), compared with a year-before surplus of 104.1 billion yen, according to finance ministry data.

The surplus jumped on a less sharp drop in exports and continued decline in imports, data showed. Markets had expected a bigger surplus of 593 billion yen.

Exports sank 35.7 percent to 4.6 trillion yen while imports dived 41.9 percent to 4.1 trillion yen.

The latest data are a positive sign for the recession-hit Japanese economy, Hideyuki Araki, economist at Resona Research Institute, said.

"Economic packages by other countries are gradually taking effect" in shoring up demand for Japanese products, he said.

But he warned against too much optimism.

"It is mostly large companies that are benefiting from other countries' economic packages and smaller firms are still struggling. Overall production activity is recovering but lacks strength," he said.

Japan posted a trade surplus of 3.9 billion yen with China, the first black ink in four months, while the surplus with the United States fell 37.1 percent to 277.6 billion yen to mark a year-on-year drop for the 22nd straight month.

The surplus with the European Union dived 71.6 percent to 90.5 billion yen for the 10th consecutive month of declines.

In the six months to June, Japan posted an overall trade surplus of 8.3 billion yen, down 99.7 percent from a year earlier but a turnaround from a deficit of 766.3 billion yen in the second half of 2008.

Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.

The economy shrank at an annualised pace of 14.2 percent in the first quarter of 2009, the worst performance on record, but recent data have indicated that exports and industrial production have begun to rebound.