INTERNATIONAL
Synthetic and Rayon Textile Export Promotion Council (SRTEPC), apex body of Indian textile industry, is making serious efforts to increase direct trade of textiles from India, especially from the man-made fabric (MMF) hub in Surat, to Afghanistan. The SRTEPC and Southern Gujarat Chamber of Commerce and Industry (SGhave jointly signed a memorandum of understanding (MoU) with a delegation from Afghanistan for boosting export of polyester fabrics and made-ups. The MoU was signed recently at 'Souce-India-2016' exhibition held in the city on August 13 and 14. Afghanistan is a fast emerging market of textiles. Indian exporters have negligible direct trade of textiles with Afghanistan which they sell to this market through third countries. The current trade with Afghanistan is valued at around $165 million, which includes export of fabrics worth $161 million, made-ups worth $3 million and polyester yarn worth $1 million. SRTEPC vice-chairman Narain Agarwal told TOI, "Afghanistan is a promising market for the export of textile fabrics from Surat and other MMF centres across the country. The banking system in Afghanistan is not very solid and thus Indian exporters have to depend on a third country to export. However, we are working out trade facilitation programme with Afghanistan's chamber of commerce in order to increase export of Indian fabrics." Agarwal added, "We are looking at multiple export markets to reach Afghanistan. The reason being Afghanistan does not have textile manufacturing centres and it depends on import of fabrics. While direct export from India to Afghanistan is negligible, but our fabric is being exported via Dubai, Karachi, Bangladesh." He said, "We are expecting to triple our direct export from India to Afghanistan in the next couple of years. Afghanistan traders are more than willing to enter into direct business with traders in Surat and other places." Chairman of SGCCI's textile committee Devkishan Manghani said, "The fabric culture in India and Afghanistan is similar. Pashmina fabric is most popular in Afghanistan and Surat is a manufacturing centre for the fabric."
SOURCE: The Times of India
The government has introduced duty drawback of 3.2 per cent to 4.7 per cent (depending on the category) for exports of non-fabric inputs made from imported fabrics under special advance authorisation scheme. This will boost export of expensive apparels made from imported fabrics. Garment sector has welcomed the decision, saying the move will encourage exporting units to enhance production. A senior executive in a knitwear unit in Tirupur said, "The garments produced out of specialty fabrics imported under this scheme will be competitive since the units are getting additional benefits through duty drawback rate. This will also attract more exporting units to enhance manufacturing of the products using specialty fabrics which have a good market abroad."
Chandrima Chatterjee, advisor, Apparel Export Promotion Council (AEPC), said, AEPC had requested the government to consider expansion of duty drawback because apparels made from imported fabrics under advance authorisation attract various other taxes on inputs. Duty free import of fabrics under special advance authorisation will be allowed for export of apparels covered under Chapter 61 and 62, subject to terms and conditions. The authorisation will be issued based on standard input output norms (SION) or prior fixation of norms committee. The authorisation shall be issued for the import of relevant fabrics, including inter lining only as input. No other input, packaging material, fuel, oil and catalyst will be allowed for import under the authorisation. Exporters will be eligible for duty drawback on non-fabric inputs as determined by the government. Authorisation and the fabric imported shall be subject to actual user condition. The same shall be non-transferable even after completion of export obligation. The fabric imported shall be subject to pre-import condition and it shall be physically incorporated in the export product (making normal allowance for wastage). Only physical exports shall fulfil export obligation.
SOURCE: The Business Standard
India’s textile sector continues to reel under the burden of mill closures and sagging exports, despite of top global fashion brands such as Zara, Mango, Vero Moda, H&M, Forever 21 and Marks & Spencer vie for a share of the Indian market. Ever since the government allowed Foreign Direct Investment (FDI) in single brand retail outlets - first at 51% in 2006 and later 100% in 2012- top global fashion brands have rushed into the country. While H&M has announced plans to invest Rs 730 crore to set up 50 stores in the country, the US-based fashion label Gap is reportedly eyeing a revenue of Rs 1,000 crore from the 40 stores it plans to open across 15 cities in the country in the next five to six years. Even the online fashion space has seen its fair share of action, including the acquisition, first of Myntra and later of Jabong by the country’s largest e-commerce company Flipkart in the recent times.
But as per data sourced from the textile ministry show that not only have exports of several types of textiles from India declined in the past three years, mill closures across the country, too, are at a record level. While in 2008, India had 381 closed textile mills, the number steadily rose to 593 by May this year. This means that almost 3 lakh textile mill workers remain unemployed, according to the government’s own figures. Among the states that have witnessed the highest number of mill shut downs are Tamil Nadu and Punjab. Although some other states like Madhya Pradesh, Gujarat, Maharashtra, Rajasthan, Andhra Pradesh and Telangana have seen new mills opening up, the growing number of shutdowns has meant that a third of the country’s mills have continued to remain shut in the past four to five years. However, none of this seems to have helped in turning around the fortunes of the Indian textile sector.
SOURCE: Yarns&Fibers
The Centre has given its approval for setting up a textile park in the state. This was stated by Ajay Tamta, Union Minister of State for Textiles, while talking to mediapersons here today. He was here on way to Dehra in Kangra to participate in the Tiranga Yatra being organised by the Bharatiya Janata Yuva Morcha. Tamta said correspondence between the Centre and the state government on the issue of setting up the textile park was on. He added that if the state government provided suitable land for the park, the Center would provide 40 per cent of the project funding for infrastructure development. He said eight different types of industries, associated in the making of textiles, would be a part of the proposed park. Tamta said the Union Government was committed towards promoting hand weaving craft and also for the welfare of weavers. He said in order to make handmade textiles better and attractive so as to boost their marketing, the Union ministry had decided to bring weavers and designers together on one platform. He said plans to link traditional weavers of Kullu, Mandi, Kinnaur and Kangra districts with designers was on the anvil. The minister said the Narendra Modi-led NDA Government had entered into five MoUs with various agencies for the development of hand weaving craft and for the welfare of weavers.
Tamta said Union Minister for Road Transport and Highways Nitin Gadkari during his recent visit to the state had announced 54 new national highways, adding that it was now for the state government to pursue the matter regarding preparing the detailed project reports and forest clearances so that funds could be sanctioned by the Center. Tamta, who is an MP from Almora, said the Congress leadership in both Himachal Pradesh and Uttarakhand were facing corruption charges. He claimed that the BJP was confident of forming the government in the state after the 2017 Assembly elections. Earlier, Una MLA and BJP state president Satpal Singh Satti welcomed the minister at the PWD rest house.
SOURCE: The Tribune India
Surat has dethroned Amritsar’s warp-knitting industry from the number one position in the country. Notably, many Amritsar-based skilled knitting artisans shifted to Surat to run warp-knitting industry there during the past few years. An entrepreneur dealing in the knitting fabric, Jatinder Sharma, said over Rs 2,500 crore annual turnover warp knitting industry of the holy city was facing the heat now. Sharma said competition from Gujarat-based knitters slowed down the growth of local industry considerably. “Surat-based warp knitting industry progressed 10 times in the past five years,” he added. Wrap knitting fabric, a branch of the textile industry, is widely used in a range of items, including shoes, school bags, automobile vehicles, furnishers, curtains, bed sheets, briefcases, sportswear, helmets, travelling accessories, men and women wears, besides many other items. He rued that the government never made an attempt to understand the industry and its requirement. He said, “Besides anything else, the industry requires marketing for its products. Keeping in view its wide use in a spectrum of products, this variety of textile has markets all over the world.”
Shortage of skilled artisans
Another manufacturer Raman Aggarwal said 350 warp knitting manufacturing units were active in the city. He said being a highly labour intensive industry it provides employment to thousands of men and women. The industry was in need of skilled artisans, who were extremely difficult to find, he added.
High maintenance cost
Many units have closed due to high maintenance cost and expensive skilled labour. Lack of support from the government was a gain for warp knitting industries of China, Vietnam, Indonesia and Turkey, which are capturing world markets in a big way.
Death of garment manufacturing units
There are no garmenting units in the city to turn the fabric produced in to an end product. Hence, they are selling textile to industries based in Kolkatta, Delhi, Surant, Mumbai and Ahmedabad.
SOURCE: The Tribune India
The State Level Coordination Committee headed by the Chief Secretary as Chairman held a meeting yesterday and decided to introduce geo-textile technology while constructing four roads under PMGSY with the Manipur State Rural Roads Development Agency (MSRRDA) as the implementing agency. Two of the four roads on which geo-textile technology would be employed are located n Thoubal district while the other two are located in Imphal East district. Officials of Works Department, Forest Department, Min- istry of Textiles and MSRRDA were present at the meeting, conveyed an official source. Hiyanglam-Hiranmei road and Thounaojam- Elangkhangpokpi road are the two roads in Thoubal district where geo-textile technology would be introduced. The same technology would be applied while constructing/repairing two roads from Khongman Zone I to Imphal-Moreh highway. The meeting also agreed to rope in Indian Jute Industries Research Association to carry out Techno-Economic Viability Study of 31 roads which would be constructed under PMGSY and a number of projects which would be taken up under six divisions of Forest Department. As agreed at the meeting, Techno-Economic Viability Study for Mao-Maram section of Imphal-Dimapur highway, six PMGSY projects, Kangpokpi-Tamei road, Phungyar water supply scheme and expansion of the Imphal-Dimapur high- way sections which are under the State PMGSY into four lanes would be done by the Ahmadabad Textile Industries Research Association, conveyed the source.
SOURCE: The E-Pao
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 46.74 per barrel (bbl) on 17.08.2016. This was higher than the price of US$ 46.51 per bbl on previous publishing day of 16.08.2016.
In rupee terms, the price of Indian Basket increased to Rs. 3126.79 per bbl on 17.08.2016 as compared to Rs. 3111.15 per bbl on 16.08.2016. RBI reference rate for 17.08.2016 is not available. Therefore reference rate of 16.08.2016 has been considered. The table below gives details in this regard:
|
Particulars |
Unit |
Price on August 17, 2016 (Previous trading day i.e. 16.08.2016) |
Pricing Fortnight for 16.08.2016 (July 28, 2016 to Aug 10, 2016) |
|
Crude Oil (Indian Basket) |
($/bbl) |
46.74 (46.51) |
40.73 |
|
(Rs/bbl |
3126.79 (3111.15) |
2723.62 |
|
|
Exchange Rate |
(Rs/$) |
66.90* |
66.87 |
*RBI reference rate for 17.08.2016 is not available. Therefore reference rate of 16.08.2016 has been considered
SOURCE: PIB
Any hope that the Karachi Textile City will achieve the export target of $2 billion and generate 80,000 jobs has died down after the proposal to close down the under-developed project, says a senior official in the Ministry of Textile Industry. “A special committee constituted earlier, headed by the finance secretary and comprised secretaries of the ministries of textile and planning, development and reform, had proposed to the prime minister to shut the project and return the acquired land to the Port Qasim Authority,” the official told The Express Tribune. It was learnt that absence of electricity and gas in the textile city was the prime reason behind the project’s failure and it was not possible to arrange the required electricity supply for the time being. The committee recommended that after handing over the land to the Port Qasim Authority, outstanding loans against the company must also be shifted to the authority. The Ministry of Textile Industry holds the Karachi Textile City administration responsible for not developing the land and providing services to attract investors. So far not a single piece of land has been sold even after seven years of establishment of the textile city.
On its part, the company blamed the government for not taking the project seriously and supporting it by providing a steady stream of gas and electricity, which is a basic requirement for establishing an industrial unit. The government had acquired 1,250 acres of land from the Port Qasim Authority for establishing the textile city in 2007. The company was established in 2009 and in 2012 the then prime minister Yousuf Raza Gilani inaugurated the city. However, since then, the authorities have failed to allot even a single plot to the industrialists in order to establish their units. A loan of Rs2.5 billion had already been acquired from banks for spending on the city’s development as well as its employees, who had been receiving hefty salaries for years. “The government is making Rs0.6 million interest payment to banks every day and the amount is piling up,” said another ministry official. The federal government has a 40% share in the project whereas the Sindh government has 16% shareholding. National Bank of Pakistan (NBP) has 8% stake, the Export Processing Zone 4%, Saudi Pak Insurance Company 4%, National Investment Bank 4%, PIDC 1%, Pak Kuwait Investment Company 4% and Pak Qatar Investment Company 4%. “The city was basically designed to establish 250 industrial units,” said Karachi Textile City CEO Muhammad Hanif, when approached for comments. He acknowledged that not a single piece of land had been sold for the past seven years.
Commenting on the possible shelving of the textile city project, the CEO said it was not possible legally as a number of shareholders and stakeholders were involved and the process would take a long time. He recommended that the government should focus on arranging gas and electricity supply to the site rather than closing it down so that it could help boost the national economy by creating the estimated 80,000 jobs and enhancing exports to $2 billion. “The government must provide land for foreign investors to enable them to set up power projects there, which will not only generate electricity, but will also help in meeting the needs of the city,” he added. He suggested that the project should be turned into a ‘power city’ by developing a coal power plant for electricity generation, which would be more feasible.
SOURCE: The Tribune
A Myanmar Textiles Manufacturers Association has finally been launched, following years of discussion about creating an upstream textile-specific body in this fast developing southeast Asian country. Finished garment exports from Myanmar have more than doubled from 2011-12 to 2014-15, from US$497m to US$1.02bn according to statistics from the country's Central Statistical Organisation (CSO). Yet the local textile industry has not kept up, with backward linkages remaining weak. A previous military-backed socialist government – whose non-socialist successor handed over power to the current National League for Democracy government in March – tried to move into commercial production of textiles, setting up several textile factories with at best mixed success. Industry insiders say building a robust domestic textile industry has been a long time coming. "Forming a textile association has been talked about for years, even a decade," says Myanmar Garment Manufacturers Association (MGMA) general secretary Daw Khine Khine Nwe.
Growing a domestic textile industry has numerous advantages for garment producers. Currently, Myanmar clothing manufacturers import textiles from a number of countries, such as China, Singapore, Taiwan and Thailand. However, China generally predominates as the source for price-competitive textiles, and Thailand for higher quality products, she says. Almost all of the fibres used by the Myanmar textile industry need to be imported as natural fibre production in the country is small and there is no production of manmade fibres. "As the quality rises for our domestic textile production, we will use them for our exported products," she adds. Current textile exports are limited as they fall in niche markets, such as silk for export to Japan and South Korea, and it will take time before mass export of commercial textiles begins. While Myanmar's textiles can potentially be exported on their own merits, they could also be used domestically as a substitute for imports. And this could help Myanmar tackle its wide and growing trade gap, at about US$4.1bn on around US$29.1bn in total trade for 2014-15, according to CSO data. Making increased use of domestically produced textiles in exported garments would reduce the trade deficit while providing positive economic spinoffs in Myanmar.
Textile production in the country may have a long way to go, but Daw Khine Khine Nwe says garment manufacturers would like to see the domestic textile industry grow. "We are like brothers and sisters…we want them to grow up, independently," she explains. Separately, local news reports suggest arrangements are underway to set up special textile and garment zones to produce raw materials and finished products in a single location. The moves tally with the Myanmar government's strategy for the textile and garment industry as part of a document entitled National Export Strategy 2015-2019, which wants to encourage manufacturers to move from operating on a cut, make and package (CMP) basis to operating on an FOB (free on board) basis.
Significant growth seen for Myanmar clothing industry
The Ministry of Industry has also agreed a three-year-project with the Korea Apparel Testing Research Institute (KATRI) to help improve Myanmar's garment industry to enter the international market. South Korea and China are the largest foreign investors in the sector. However, a report published earlier this year found excessive working hours, incorrect pay, trade union discrimination, sexual harassment, and unsafe working environments are just some of the issues uncovered in a number of Korean-owned garment factories in Myanmar.
SOURCE: The Just Style
The Vietnamese textile industry’s export value under the current planning was targeted to reach US$20 billion by 2020, but the figure exceeded $27 billion in 2015 and is expected to hit $31 billion this year. From 2010 to 2015, the industry had stable growth of export value of 15 per cent per year. In the first half of this year, its garment and textile exports have reached $12.6 billion, representing a 4.72 percent year-on-year increase and accounting for 41 percent of the sector’s target for 2016. According to the Việtnam Textile and Garment Association (VITAS) chairman Vũ Đức Giang, there is a big gap between what they have achieved and what they had planned. Hence, VITAS has suggested the Government and related authorities review and adjust the development planning for the industry as the planning to 2010 with vision towards 2030 is obsolete. Vietnam’s demographics – a population structure with more than double the number of working age than dependents – was advantageous for the expansion of the sector, so the Government should help the industry keep up with the country’s integration and make use of the abundant resources, he said. Deputy Minister of Industry and Trade Hồ Thị Kim Thoa said that global textile and garment producers were moving production to areas with good labour forces and lower production costs. Thoa endorsed VITAS’ recommendation, saying that the industry should make changes to its planning as it was enjoying opportunities stemming from the country joining free trade agreements.
To help textile and garment firms take advantage of opportunities and overcome challenges brought by free trade agreements, VITAS suggested the Government update the sector development strategy that was approved by the then Prime Minister in 2008 and the Ministry of Industry and Trade in 2014. The association proposed the Government create a development strategy to 2025 with a vision towards 2040. It also asked the Government, the Ministry of Industry and Trade, and the Ministry of Planning and Investment to group textile and garment enterprises in concentrated industrial parks. This issue was important for the industry’s sustainability and the environmental protection, Giang said, adding that the concentration would facilitate the treatment of wastewater from the enterprises. Currently, there are several textile and garment industrial zones in the northern provinces of Hưng Yên, Thái Bình and Nam Định and the southern province of Đồng Nai and Bình Dương, which cover a few hundred hectares each. VITAS suggested the Government allow the establishment of textile and garment industrial zones with 500-1,000 ha to draw domestic and foreign capital. Giang said that it was necessary to upgrade transportation infrastructure connecting the zones with logistics centres and ports. On wastewater treatment, the VITAS chairman said that it was headache for the sector because building a wastewater treatment system was very costly. He suggested the Government offer a preferential lending rate for enterprises which invested in wastewater treatment systems in the parks. Giang also recommended the Government amend environment regulations applied to the sector.
Specifically, requiring a firm specialised in processing with more than 400 workers to build a wastewater treatment plant worth billions of đồng was beyond its capability and a waste of money because processing companies did not discharge wastewater like dying ones. Thân Đức Việt, deputy general director of the Garment 10 Corporation, said that most firms in the textile and garment industry were small- and medium-sized enterprises with limited financial capacity, so they need support from the Government. Attracting investments in producing fabric and yarn, and dying would held address the shortage of materials supply to the sector, the CEO said. In China, India and Bangladesh which have a developed textile and garment sector, enterprises did not have to invest in wastewater treatment factories but the Government did. This would encourage investment in the Vietnamese garment and textile sector.
SOURCE: Yarns&Fibers
Ethiopia working tirelessly to boost various industries in the second Growth and Transformation Plan that will support the journey to industrialization. Also as the country's climate is suitable and very supportive for animal fiber and cotton production which are significant ingredients for the textile industry. The country realizing the benefits has begun investing in the textile industry. On the other hand, the plenty of young human resource will assist every engagement in the sector. Recently, in addition to the Bole Industry Village, similar industry village has been marked in Hawassa. Furthermore, simultaneously the construction of extra industrial villages (parks) is underway throughout the country. Hawassa Industrial Park (HIP) construction involved cost to more than 5 billion Birr. The expansion of such huge industrial park is the indication of the nation's progress to the industrialization. It is also one of the parks to be inaugurated soon and operate for textile and apparel sector. Development in the sector also necessitates the importation of modern technological equipment and transfer of knowledge so as to strengthen the production and productivity. Moreover it paves the way for experience sharing and training from the world textile partners. If the country could not compete on the world market, it would be a great loss. Because competing on the international market is not a preference rather it is an obligation, according to Fasil Tadesse, Managing Director of Kebire Enterprise and African Cotton, Garment and Textiles Federation Board and Ethiopian Textile Industries Associations President.
According to him, expanding industry villages has a number of benefits including attracting various companies, involving competent national organizations and accelerating the sector's business throughout the country and the world. Nowadays, the nation is on the right track through direct foreign exchange. The world giant garment industry companies are coming to Ethiopia. Therefore, the coming of these companies might be followed by other small but critical companies that are producing string, button and other similar bolstering textile materials. This could help the nation to reduce the import cost by producing these materials at home.
On the other hand, the situation facilitates the opportunity for technological transformation. Indigenous garment fabrics will share important experience from their foreign business partners. The training opportunity will also be managed. Other foreign based Ethiopian garment industries also will come back to use the opportunity. This shows the significance of the expansion of industrial zones. Fasil believes that simply constructing industrial villages could not be a change; it needs the involvement of sector factories and companies. Especially, the participation of indigenous textile companies will play a significant role in building nation's capacity through enabling national producers to look for their nation brand. On the other hand, the participation of the indigenous factories is important scheme to safe the sector from the influence of fluctuation of foreign companies. Here, the role of the government is vital to encourage national companies to engage in the sphere whether the foreign companies are engaged or not.
Noticing the experience of Bangladesh's textile firm, Fasil explained that over 80 percent of companies in the Bangladesh textile industry village are national companies. These could be happen for the reason that their government has been making notable encouragements for national companies by facilitating financial and material subsidies. It also provided useful training for the companies. Ethiopian government should learn from this. Fasil also noticed that in Ethiopia there are two main problems in the garment industry sphere. The first one is that most of the individuals who have the training and knowledge of the sector have no the capital to spent for it. Moreover, the main problem is lack of mediation to coordinate these crucial business partners to work together so that they would be profitable in the textile industry. The government should also facilitate the assistance of finance to the middle capital industries. On the other hand, the joining of foreign companies in the Ethiopian textile industry will be the bolstering companion to the indigenous companies. The expansion of industry villages is one of the most significant measures in the development of the sector. The accumulation of these measurements may reduce the problems related to the textile sector. The other problem in the Ethiopian textile industry is lower capacity of native factories and companies on investment. Therefore, to reduce such chains of problems the Ethiopian Textiles Industries Association is doing its level best through building the capacity of native companies and enabling them to be competent on market. It is also facilitating market opportunities. The association is also working with stakeholders to address problems that are needed the support of the government and other partners. The development of industrial parks is a cornerstone for the development of manufacturing sector for the implementation of Ethiopia’s vision to become middle income country and top light manufacturing hub by 2025.
SOURCE: Yarns&Fibers
The Sudanese government and Chinese companies have signed a Memorandum of Understanding (MoU) allowing the latter to grow one million feddans of cotton in Sudan. The feddan is a unit of area equivalent to 1.038 acres (0.42 ha). This was disclosed by the speaker of Gazira state Legislative Council. On Wednesday, speaker of the Gazira state Legislative Council Jalal Min Allah Gibril said that the Chinese companies would cultivate 450,000 feddans in his state besides building textile and ready-made clothing factories. Sudan’s Minister of Water Resources, Irrigation and Electricity, Mutaz Musa, pointed out that the ministry is implementing 155 electricity projects with china at a cost of 10 billion dollars. His government will also fund the $10 billion projects from multiple sources, adding that the five-year plan includes power plants and dams. In 2013, the then Sudan’s minister of agriculture Abdel Halim al-Mutafi, announced that his government signed an agricultural cooperation agreement with Beijing which gives Chinese companies several options to operate in Sudan.
Sudan’s National Assembly unanimously approved a legal framework agreement last June that gives Saudi Arabia the right to cultivate one million feddans of land in Upper Atbara and Setait project for 99 years. Sudan’s agricultural sector has continued to deteriorate over the years mainly as a result of negligence, drought, mismanagement, high taxes and the overall economic climate. Sudanese farmers often complain about the high costs of imported materials such as fertilizers. Many of them were sent to jail as their debt piled up. Even, foreign investors also complain about lack of infrastructure and unfriendly laws which they say deters them from putting money in Sudan’s vast farmlands. Several ambitious plans enacted to bring life to the sector have failed to materialize and critics say the government forfeited a golden opportunity during the oil boom to boost agriculture.
SOURCE: Yarns&Fibers
Japan's exports tumbled in July at the fastest pace since the global financial crisis with a resurgent yen adding to the challenge of weak external markets - leaving the economy and the government more reliant on shaky domestic demand to drive growth. The yen edged toward a seven-week high versus the dollar, prompting bureaucrats from the Finance Ministry, the Bank of Japan and the financial regulator to hold an emergency meeting to examine the current state of the market. Japan's top currency tsar reiterated a veiled threat to intervene in response to speculative moves, but traders say few options are available because it could be considered competitive devaluation, something the Group of Seven frowns on. "We are constantly watching for speculative moves and will respond with the necessary steps if needed," Vice Finance Minister for International Affairs Masatsugu Asakawa said after the meeting.
Policymakers are in a bind
Japan's exports have now fallen for 10 consecutive months, the longest losing streak since losses on U.S. subprime mortgages sparked a global financial crisis that crippled the U.S. financial system. Still, intervention may be unable to stop the yen's rise as long as investors pare back expectations for U.S. interest rate hikes amid a run of spotty economic data and mixed signals from Federal Reserve officials. In July exports fell an annual 14.0 percent, which matched the median estimate in a Reuters poll of economists and was the fastest decline since October 2009. Economists say there is a growing risk that weakness in exports will persist as global economic uncertainty shows little sign of receding, which could undermine Japanese policymakers' efforts to re-energize the economy. "Exports do not have the strength required to lead Japan's economy," said Norio Miyagawa, senior economist at Mizuho Securities. "This is a clear message that we need to support domestic demand. Government stimulus will help, but only in the short term. There could be more talk of additional monetary easing."
Exports in July fell due to lower shipments of cars to the United States, ships to Central America and steel to Italy, the data showed. Exports to China - Japan's largest trading partner - fell an annual 12.7 percent in July, extending the 10.0 percent decline seen in June. U.S.-bound shipments fell 11.8 percent year-on-year, versus a 6.5 percent annual decline in the previous month. Real exports fell 3.2 percent in July from the previous month, the fastest decline in 14 months, separate data from the Bank of Japan showed. Real imports fell 1.1 percent, the first decline in three months, the data showed. The yen JPY= has risen around 20 percent versus the dollar so far this year and further gains would cut deeply into exporters' earnings and increase deflationary pressure by lowering import prices. The volume of Japan's imports of oil and kerosene fell 8.5 percent in July, the first decline in three months, finance ministry data showed. Recent weakness in industrial output and second-quarter data showing the economy ground to a halt suggests Japan's demand for commodities could potentially weaken further. The BOJ said it will conduct a "comprehensive review" of its quantitative easing and negative interest rate policy at its meeting next month after repeatedly pushing back the timing for its 2 percent inflation target. Some economists say the BOJ could use the review to ease monetary policy, potentially weakening the yen if bond yields decline further. Prime Minister Shinzo Abe's cabinet approved fiscal measures worth 13.5 trillion yen earlier this month in an effort to revive the flagging economy and breathe new life into his economic agenda.
SOURCE: The Reuters
