UPDATE 1-Japan exports firm, led by solid Asia growth

* Exports up 43.5 pct from previous year

* Deflation likely to persist, leaving BOJ under pressure
(Adds comments, backgrounds)

TOKYO, April 22 (BestGrowthStock) – Japan’s exports held firm in
March, in a sign that solid growth in Asia and a recovery in the
U.S. economy is still fuelling Japan’s export-driven recovery.

Exports rose 43.5 percent from a year earlier, led by
shipments of cars, semiconductors and auto parts. It was slightly
below a median forecast for a 45.9 percent rise. [JPEXPY=ECI]

“The picture remains the same, that Japan’s economic recovery
continues to be driven by exports, particularly to Asia,” said
Junko Nishioka, chief Japan economist at RBS Securities.

But the strength in exports has been slow to spill over to
the domestic economy, with many companies struggling to deal with
domestic deflation.

One analyst added that China’s steps to ward off a bubble in
its economy could take their take toll on Japanese exports,
casting doubt on the Bank of Japan’s recent brighter view on the
recovery at home.

“As China continues to apply the brakes on its economy,
Japan’s exports may not be able to maintain the current momentum
in coming months, and this may negatively affect corporate
spending, which has shown signs of improvement,” said Takeshi
Minami, chief economist at Norinchukin Research Institute.

“The Bank of Japan has said the economy’s recovery may be
sustained, but there is strong uncertainty about this forecast.”
Graphic on Japan’s exports http://link.reuters.com/ryx78j
More stories on Japan’s economy [ID:nECONJP]

Rebounding exports were a major driving force behind Japan’s
economic recovery last year from its worst recession since World
War Two, with shipments to Asia leading the way thanks to strong
growth in the region.

“Export growth will probably slow as restocking of
inventories comes to an end, but the recovery in the world
economy will probably support exports,” said Yoshimasa Maruyama,
economist at Itochu Corp.

Exports have been recovering faster than many economists had
forecast in the past several months, easing concern that the
Japanese economy may hit a soft patch.

Still, domestic consumption remains tame and deflation is
expected to persist for at least another year, suggesting the
government is likely to put pressure on the central bank to deal
with deflation.

More than a hundred ruling party lawmakers are calling on the
BOJ to take more drastic steps to end deflation and boost nominal
economic growth. [ID:nTOE63C066]

Finance Minister Naoto Kan said he wants inflation of one to
two percent.

Exports to Asia, which account for more than half of Japan’s
total exports, rose 52.9 percent in March from a year earlier.

Growth in exports to China remained almost flat from the
previous month at a 47.7 percent rise in March compared with a
47.6 percent gain in February, while shipments to the United
States gained an annual 29.5 percent, versus a 50.5 percent rise
in February.

The trade balance came to a surplus of 948.9 billion yen,
compared with the median estimate for a 1.03 trillion yen
surplus. [JPTBAL=ECI]
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(Reporting by Tetsushi Kajimoto; Editing by Hugh Lawson)

UPDATE 1-Japan exports firm, led by solid Asia growth