Japan’s March exports rose by 7.3% year-on-year, marking the fourth consecutive monthly increase, primarily fueled by car shipments to the U.S. Major companies’ business confidence did, however, decline as a result of worries about the yen’s depreciation and a slow pace of economic recovery.
Although real export volume decreased by 2.1% in March, it nevertheless exceeded economists’ predictions of 7.0% growth, casting doubt on the export sector’s viability as a major economic engine. Policymakers expect that strong export growth will counterbalance weak domestic demand and allow the Bank of Japan to move forward with normalising monetary policy.
Experts predict that exports will rebound in April, especially if US consumption remains strong. However, recent data also shows a drop in business confidence, which is linked to constraints on the cost of living and China’s uncertain economy.
The weakening of the yen to levels not seen since 1990 has increased import costs and adversely affected consumer spending.
Despite these obstacles, the BOJ is hesitant to tighten monetary policy, particularly in light of indications of weak demand in the economy. According to a poll, there is little sign of a volume rebound in industries like chemicals.
