JAPAN'S TRADE SURPLUS RISES FOR SECOND MONTH IN A ROW

       Nascent recovery at risk from weak demand: economists
       Japan's trade surplus soared for a second straight month as the world's second-largest economy drags itself out of its worst recession in decades, official data showed yesterday.
       Exports exceeded imports for a sixth straight month, aiding a tentative economic recovery from a severe slump trigged by a collapse in overseas demand for Japanese cars, electronics and other goods.
       The trade surplus jumped more than four-fold to 380.2 billion yen (Bt138 billion) in July, from 81.9 billion Yen a year earlier, the finance ministry reported.
       The figure was slightly smaller than the 390 billion Yen surplus the market had expected.
       Hopes are mounting that the global economy is slowly getting back on its feet, helped by massive amounts of government stimulus spending.
       Japan's exports fell 36.5 per cent year on year to 4.84 trillion Yen in July while imports sank 40.8 per cent to 4.46 trillion Yen.
       Economists have been cautious in their assessments however, warning that the nascent recovery could be undermined by persistently weak domestic demand. Salaries are falling and the unemployment rate has risen to a six-year high of 5.4 per cent.
       The fall in exports by value was sharper than the drop of 35.7 per cent in June, but that was because Japanese product prices have fallen as energy costs decline, said Daiwa Institute of Research economist Hiroshi Watanabe.
       China's economic stimulus spending and an improvement in the US economy helped to lift demand for Japanese goods, he said.
       "Exports will likely improve, at least in terms of volume, until the end of the year. I believe the trade surplus will improve in the coming months."
       Export volumes fell 27.6 per cent in July from a year earlier, compared with drops of more than 40 per cent in February and March, the data showed.
       "Exports are likely to continue rising, given the favorable outlook for the US and China, Japan's key export destinations," said Barclays Capital economist Kyohei Morita.
       One worry, however, is that the end of the US government's popular "Cash-for-Clunkers" programme to boost auto sales this month could weight on exports.
       Highlighting the auto industry's ongoing woes, the Nikkei business daily reported that Toyota Motor plans to slash its global production capacity by 10 per cent to cope with weak sales.
       Against that backdrop, "exports are unlikely to return to last year's levels even after the global economy and the financial markets stabilise", said RBS Securities economist Junko Nishioka.
       Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
       But data released last week showed the economy expanded by 0.9 per cent in the three months to June from the previous quarter, returning to positive growth after the worst recession since World War II.
       "We can expect the recovery in production and exports of manufacturing companies will continue in the coming months," said Naoki Murakami, chief economist at Monex Securities.
       Japan's trade surplus with the United States shrank by 44.5 per cent in July from a year earlier to 333.0 billion Yen, the finance ministry said.
       The trade deficit with China narrowed by 27.2 per cent to 54 billion Yen.
       Caption
       AUTOS and cranes for export are loaded on board a ship at Yokohama. Japan's trade surplus more than quadrupled in July but still failed to meet expectations.