Japan exports growth slows sharply

TOKYO, Apr 21 (Reuters): Japan suffered its worst annual trade deficit in March as exports growth slowed to its weakest in a year, suggesting a rapid loss of economic momentum that may prompt policy makers into early action as a national sales tax hike puts more strain on growth.
The Bank of Japan (BOJ) has repeatedly ruled out fresh easing measures in the near term, insisting that the economy is on track to meet its 2 per cent inflation target even as recent soft data hit investor confidence.
However, the double-whammy of weak external demand and a chill in domestic consumption from the April 1 sales tax hike to 8 per cent from 5 per cent might add pressures on the BOJ to act sooner rather than later.
"If sluggish exports persist and domestic demand slumps more than expected in April and May, the Bank of Japan could ease policy further as early as in June or July," said Naoki Iizuka, economist at Citigroup Global Markets Japan
The slowdown in China, a major export market for Japan, is another blow for the world's third-biggest economy.
Ministry of Finance data showed that exports rose 1.8 per cent in March from a year earlier, the slowest since March last year, following a 9.8 per cent annual gain in the previous month. That was well below a 6.3 per cent increase expected by economists in a Reuters poll.
Worryingly, shipments to China rose an annual 4.3 per cent in March, a marked slowdown from a 27.6 per cent annual increase in February. Moreover, US-bound shipments grew a modest 3.5 per cent, the slowest annual gain since December 2012 when they fell 0.8 per cent.
The weak external shipments helped push Japan's trade deficit to a record 13.75 trillion yen ($134.45 billion) for the fiscal year that ended in March, further undermining the balance of payment position.