Japan's trade surplus hits 18-month high

TOKYO: Japan's trade surplus soared almost six-fold last month from a year earlier, hitting an 18-month high on the back of recovering demand in China and other Asian countries, official figures show.

Exports exceeded imports for an eighth straight month, although they remain sharply lower than before the current global economic slumpbegan.

Asia's biggest economy posted a trade surplus of 520.64 billion yen (5.7 billion dollars) in September -- the highest figure since March 2008 -- up from 90.97 billion yen a year earlier, the finance ministry said.

Exports were down 30.7 percent from a year earlier, better than a drop of 36.0 percent in August. Imports fell 36.9 percent due to lower energy costs.

The world's second largest economy is slowly recovering from its worst recession in decades, helped by a rebound in exports and factory output.

"Japan is benefiting from recovering demand in Asia. A strong yen suppressed exports figures in value but exports volume is solid," said Takuji Aida, an economist at the investment bank UBS.

Japan's strong trade ties with the fast-growing Chinese economy have cushioned the blow from the global economic downturn, which hit the United States and Europe particularly hard.

"Asia played the main role" in boosting Japan's trade surplus, Barclays Capital economist Kyohei Morita said.

"In particular Chinese public works, aided by government fiscal spending, have resulted in demand for Japanese products. As the Chinese economy is on a recovery path, there will be more demand for Japan," Morita said.

China said Thursday its economy grew 8.9 percent in the third quarter of 2009 helped by massive government stimulus measures that were brought in to help it fight off the global slump.

Japan's trade surplus with the rest of Asia grew 8.0 percent in September from a year earlier to 723.01 billion yen, the first rise in 13 months, with the deficit with China shrinking 73.4 percent to 66.85 billion yen.

The surplus with the United States fell 33.8 percent from a year earlier to 371.27 billion yen while that with theEuropean Union declined 64.3 percent to 132.34 billion yen.

Japan's heavy reliance on foreign markets to drive its economic growth left it highly vulnerable to the recentglobal recession.

Its economy returned to positive growth in April-June, limping out of a year-long recession as overseas economies picked up.

"Exports will continue to support the Japanese economy", but the effect of Tokyo's stimulus spending package will start to fade, said Morita.

"It's inevitable for the Japanese economy to grind to a halt from the January-March period as domestic demand runs it course."

But he added: "The economy will pick up again in mid-2010 thanks to the effect of new government policies," including a child-rearing allowance and an end to motorway tolls, he said.