UPDATE 3-Japan export growth slows, feels pinch of yen

* Sept exports rise 14.4 pct yr/yr vs forecast 9.6 pct gain

* Annual export growth to Asia slowest since November 2009

* G20 agreement may make it difficult for Japan to intervene

* Dollar hits fresh 15-year low versus yen
(Adds comments from senior government official)

By Rie Ishiguro

TOKYO, Oct 25 (BestGrowthStock) – Japan’s exports trumped
expectations in September, but the seventh consecutive slowdown
in annual growth showed the economy was feeling the pinch from
the strong yen and slackening growth in its overseas markets.

The 14.4 percent increase from a year earlier well exceeded
economists’ expectations, which some analysts took as a sign that
exports were proving more resilient to the currency’s strength
and global headwinds than some had initially feared.

“The global economic slowdown and a strong yen indeed have
had a negative impact on the economy but the data supports the
view that the recovery trend has not disappeared,” said Yoshimasa
Maruyama, an economist at Itochu Corp.

Maruyama predicted exports to bottom out in the next six
months and start regaining pace some time after that.

The headline figure came above a market consensus forecast of
a 9.6 percent rise and just below a 15.5 percent rise in August,
Ministry of Finance data showed on Monday. [JPEXPY=ECI]

Yet the numbers, which also showed shipments dipping 0.1
percent from the previous month, and renewed downward pressure on
the dollar bode ill for the Japanese policymakers, struggling to
keep the economic recovery intact.

Investors interpreted a Group of 20 agreement over the
weekend to shun competitive devaluations as a green light to
resume dollar selling, driving it to a fresh 15-year low against
the yen.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Export growth http://link.reuters.com/new89p

Exports by destination http://link.reuters.com/hew89p

Interactive G20 graphic: http://link.reuters.com/men39p

PDF report on currencies: http://r.reuters.com/gez77p

More stories on Japan’s economy [ID:nECONJP]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

While the yen (JPY=: ) is now trading above levels at which the
Japanese authorities intervened last month analysts say the G20
agreement will make it harder for Tokyo to justify another foray
into the currency markets.

Fresh evidence of the pain inflicted by the yen’s strength
came in the form of a media report that Toyota Motor Corp
(7203.T: ) will revise its expected dollar/yen rate to 80 yen from
90 yen for the remainder of its business year ending in March,
which will slash operating profit by 150 billion yen ($1.84
billion). A Toyota spokeswoman declined to comment on the report.
[ID:nTKZ006604]

Acknowledging the pressures, the government last week
downgraded its view of the economy for the first time in more
than a year. The Bank of Japan is also expected to cut its
outlook at a policy meeting this week.

Analysts expect no significant economic upturn at least until
early next year as the expiration of government subsidies for
low-emission cars is set to hit factory output.

Kazuo Mizuno, a senior government official in charge of
analysing underlying economic trends, signalled that Japan may be
headed for further weakness in the economy.

“Output is expected to fall in July-September (from the
previous quarter) and in October-December, given the expiration
of government subsidies,” Mizuno told Reuters on Monday.

“Seven out of eight times in the past, two straight quarters
of output falls have led to a recession in Japan,” said Mizuno,
deputy director-general of the Cabinet Office’s economic
assessment and policy analysis.

EXPORTS TO ASIA

Slowing growth in shipments of cars and steel accounted for
the slowdown in overall export growth, the data showed.

Annual growth in exports to Asia, which account for more than
half of Japan’s total exports, slowed to 14.3 percent from 18
percent in August to its slowest pace since November 2009,
showing that Japan is getting less support from fast-growing
Asian economies.

Shipments to China, Japan’s largest trading partner, were up
10.3 percent, also the slowest annual rise since November.

Exports to the United States rose 10.4 percent in September
from a year earlier, while Europe took in 11.2 percent more of
Japanese goods than a year earlier, the data showed.

The slowing trend will likely keep market expectations alive
for further monetary easing by the BOJ. The central bank is
expected to stand pat on policy at its rate review on Thursday
but its more solemn view of the future will leave the door open
for further action later this year. [ID:nTOE69O055]
(Additional reporting by Kaori Kaneko; Editing by Tomasz
Janowski and Chris Gallagher)

UPDATE 3-Japan export growth slows, feels pinch of yen