x Abu Dhabi, UAESaturday 29 July 2017

Quake may dent exports to Middle East

Expectations of a rise in Japanese exports to the Middle East this year may have to be revised after the disaster in the country.

Japanese trade officials in the region fear the triple disaster of an earthquake, tsunami and nuclear reactor damage will hit the country's exports to the Middle East.

"We were expecting better trade results for this year but now I'm not so sure that will be the case," said Hiroki Matsumoto, the managing director of Japan External Trade Organisation (Jetro) in the Mena region.

"In the eastern side of Japan there are various automobile and other factories and we still don't know what is happening with them."

The disaster is the second disruption to Japan's regional trade this year. Unrest in Egypt, Tunisia, Libya and other economies is also expected to affect exports.

"The situation in Japan will have more influence [on exports] than activity in the region," said Mr Matsumoto.

Japan is the world's fourth-largest exporter and relies heavily on trade revenues to drive its economy. A large number of exporters ranging from steel makers to retail firms have halted parts of their operations crippled by the earthquake and tsunami. An even wider spectrum of industries are now braced for electricity blackouts planned to ease the strain on the country's power grid.

Japan's global exports rose 34 per cent to US$696.8 billion (Dh2.55 trillion) during the first 11 months of last year compared with the year-earlier period. Exports to the GCC increased 16 per cent to $18.2bn over the same period.

Regional consumers are big buyers of Japanese cars such as Toyota, Nissan and Honda. Vehicle exports to the UAE surged 84 per cent to $3.2bn in the first 11 months of last year compared with the same period in 2009. Japan was the top exporter of used cars to Dubai in 2009.

Demand is also high in the region for TVs, computers and other electronics goods made by companies such as Sony and Toshiba.

Toyota said on Monday it was suspending production at all domestic factories until today, resulting in a production loss of 40,000 vehicles for the world's largest car maker.

Honda, Nissan, Suzuki and Mazda also said they would temporarily stop production at plants.

Nomura Securities has estimated that a 25 per cent drop in power supply across its service areas in the eastern Japan region could dent production in the manufacturing sector by 2.5 per cent.

Mr Matsumoto said the recent trend among some large manufacturers to shift production elsewhere in Asia should help to shield firms from a bigger slowdown in output.

Growing demand in emerging markets and the need to offset the impact of a strong yen on their product lines have persuaded some companies to move more production to countries such as Thailand, Malaysia and China in recent years.