Mainland China, top export destination of Japan

Concerns about a Japanese recession will unlikely go down even as exports are rising higher than expected. Mainland China bumped off the United States in being the top export destination of Japan. Aside from China, demands from Europe also helped boost their exports from last year.

Global slowdown, tipping Japan to recession

Japan, the world’s second largest economy has been affected by U.S economic problems thus helping China become its top export destination for the first time since World War Two.

"The July data is not enough to change the overall outlook for exports to lose steam in tandem with a global slowdown," said Takehiro Sato, chief economist at Morgan Stanley.

A 5.6 percent rise was the median market forecast but exports rose 8.1 percent in July from last year, bigger than what was expected.

Many famous brands in Japan like Toyota and Panasonic have been the main drivers of its economic growth in the past years, but global problems have already tipped Japan into recession.

The central bank’s interest rates remain unchanged at 0.5 percent which is the bleakest assessment of the economy for many years in the Asian economy. This is another sign that the global slowdown spurred by the U.S credit crisis may push Japan to face recession.

Factories now feel the pinch of the economic problem from high energy to cost of commodity. Slowing exports squeeze corporate profit margins and weigh on capital spending.

"Imports are surging in value, which shows that high crude oil prices continue to hurt corporate revenues and are leading to an outflow of income from Japan," said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute.