WASHINGTON – Japanese exports remain flat despite the bonus of a weaker yen, in part because manufacturers are shifting production overseas, the International Monetary Fund said Monday.
“Real goods exports from Japan have remained broadly flat during the past few years despite a sharp depreciation of the yen since late 2012,” the Washington-based organization said in a report titled October 2015 World Economic Outlook.
The yen has depreciated by about 35 percent in real effective terms since late 2012, the IMF said. Late 2012 is when Prime Minister Shinzo Abe came to power, advocating aggressive monetary easing by the Bank of Japan.
Japan’s exports, however, remain “currently some 20 percent below the level predicted by a standard export demand equation estimated for the pre-Abenomics period,” the organization said, referring to a package of policies the government touts as growth-oriented.
On average, a 10 percent real effective depreciation in an economy’s currency is associated with a rise in real net exports of 1.5 percent of gross domestic product, according to the IMF.
The international body said the response of exports to the yen’s depreciation has been much weaker than in ordinary cases as a result of a number of “Japan-specific factors.”
The IMF attributed Japan’s sluggish exports to the acceleration in production off-shoring since the global financial crisis in 2008 and uncertainty about the domestic energy supply after the massive 2011 earthquake and ensuing tsunami that hit northeastern Japan.
It also cited Japan’s deeper involvement in global value chains, making the world’s third-largest economy “a more important intermediate-input supplier for other countries’ exports.”