By Jason Clenfield
April 23 (Bloomberg) -- Japan's exports rose in March at the slowest pace in almost three years as shipments to Asia lost momentum and the U.S. slowdown deepened.
Exports, the driver of more than half the economy's fourth- quarter expansion, rose 2.3 percent from a year earlier, the Finance Ministry said today in Tokyo. The pace was slower than February's 8.7 percent and the 6.2 percent median estimate of 19 economists surveyed by Bloomberg News.
The U.S. housing recession caused shipments to Japan's largest market to fall for a seventh month, the longest losing streak in four years. The yen's gain to a 12-year high against the dollar exacerbated the declines. Shipments to China grew at the slowest pace since June 2005, indicating the effects of the U.S. slump may be spreading.
``Exports are still on a moderate expansionary path, but they're clearly losing steam,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Shipments to the U.S. are already in really bad shape and the question is how demand from emerging economies will go.''
Imports rose 11.1 percent from a year earlier as oil prices surged to a record, helping the trade surplus shrink 30.2 percent to 1.12 trillion yen ($10.9 billion), the ministry said. Export growth was the slowest since May 2005.
The yen traded 14 percent higher against the dollar in March from the same month a year earlier, eroding the value of exports when repatriated and making Japan's goods less competitive abroad. About half of the nation's shipments overseas are settled in dollars.
12-Year High
The yen was at 103.02 per dollar as of 12:05 p.m. in Tokyo from 102.90 before the report was published. The currency rose to 95.76 on March 17, the highest since 1995.
Exports to the U.S. fell 11 percent in March from a year earlier, the steepest decline since November 2003. Shipments to the European Union climbed 3.6 percent, half the pace of the previous month. Sales to China increased 3.2 percent, and those to Asia rose 1.9 percent.
``Exports' contribution to the overall economy will probably decline,'' said Mamoru Yamazaki, chief Japan economist at RBS Securities in Tokyo. ``The report signaled Japan's economic growth will probably slow in the first half of this fiscal year but avoid a recession.''
During the last U.S. contraction in 2001, Japan's exports fell and the country followed its biggest overseas market into a recession of its own. This time demand from Asia, led by China, has been cushioning the impact of the slowdown in Japan's largest export market. Exports to Asia rose to a record 3.7 trillion yen last month, today's report showed.
`Do Just Fine'
``Japan can withstand a U.S. recession,'' said Takuji Okubo, an economist at Merrill Lynch & Co. in Tokyo. ``So long as Asia avoids a recession, Japan's economy will do just fine.''
Shipments by volume, a measure that excludes currency and price fluctuations, rose 5.2 percent, more than twice the pace of export growth by value.
``What that shows is that global demand is really quite strong, despite the mess in the U.S.,'' Richard Jerram, chief Japan economist at Macquarie Securities Ltd. in Tokyo, said on Bloomberg Television. ``We've seen similar numbers coming out of Taiwan and Korea.''
Taiwan's exports rose at the fastest pace in two years in March on the strength of shipments to China. South Korea's overseas shipments climbed 20 percent.
China's economy, which this year may overtake Germany's as the world's third biggest, has averaged more than 10 percent growth over the past nine quarters. The nation's appetite for electronics, cars and machinery is fueling exports from other economies in the region.
Excavators, Tractors
The Japan Construction Equipment Manufacturers Association estimates that China will help drive record shipments of Japanese-made excavators, tractors and cranes this year. That demand has prompted Komatsu Ltd. and Hitachi Construction Machinery Co., Japan's biggest makers of earthmoving machinery, to expand factories and boost production.
Net exports, or shipments minus imports, probably added 2 percentage points to Japan's economy in the first quarter, economists at Goldman Sachs Group Inc. said after today's report. The government is scheduled to release the gross domestic product report around May 16. The economy grew an annualized 3.5 percent in the fourth quarter.
Exports grew 9.9 percent to a record in the year ended March 31, the Finance Ministry said.
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