Tokyo: Japan`s exports unexpectedly fell in June for a second straight month in a worrying signal that weak external demand could continue to drag on the economy`s recovery from a sales tax rise.
Exports fell 2.0 percent in June from a year earlier, compared with a 1.0 percent increase expected by economists in a Reuters poll, data from the Ministry of Finance showed on Thursday.
That followed a 2.7 percent decline in the prior month, which was the first annual drop in 15 months.
Sluggish exports, a weak spot in the economy, have been a concern for policymakers who hope that a recovery in external demand would help offset the pain from the April sales tax hike to 8 percent from 5 percent.
"This raises more concern about how the economy will do after the sales tax hike and makes the government less likely to proceed with the next tax hike scheduled for next year," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.
"Weak exports alone will not prompt the Bank of Japan to ease policy, but if consumer spending also weakened, then expectations for a policy change would increase."
Exports to the United States, a key market, fell 2.2 percent in June from a year ago as more Japanese companies produce goods in other countries, such as Mexico, for U.S. consumers.
Exports to China, another important market for Japan, rose 1.5 percent year-on-year in June. Exports to Asia, which account for more than half of Japan`s total exports, fell 3.8 percent in June from a year earlier.
Imports grew 8.4 percent in the year to June, matching the median estimate, bringing Japan`s trade balance to a deficit of 822.2 billion yen ($8.10 billion), the MOF data showed, marking two full years of trade shortfalls.
BOJ Governor Haruhiko Kuroda said last week exports would increase eventually as overseas markets, mainly in advanced economies, recover.
The BOJ`s aggressive monetary stimulus helped weaken the yen by roughly 20 percent in 2013, boosting exporters` profits and share prices. However, the yen has moved sideways this year versus the dollar, limiting gains in export proceeds.
The government raised the sales tax to 8 percent from 5 percent in April, but it could delay a second tax hike to 10 percent scheduled for October next year if the economic outlook weakens.
