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27 January 2011
Last updated at 02:25 ET
Japan's exports grew for the second month in a row in December, thanks in part to strong demand from China, official figures have shown.
Exports grew by 13% compared with a year earlier, the finance ministry said, an improvement on the 9.1% growth seen in November.
Strong demand in North America for Japanese cars also boosted exports.
Exports are key to Japan's economy and analysts say December's figures bode well for the country's recovery.
November was the first month in nine months that the rate of export growth had increased.
The slowdown between February and October, in part due to a strong yen - which makes exports more expensive - had raised concerns about Japan's economic recovery.
However, the latest export figures have helped to ease some of these fears.
Exports to China grew by 20.1%, while those to the US rose 16.5%.
For 2010 as a whole, exports grew by 24.4%, the first annual expansion in three years.
"Export growth in December is significant - this is a good sign for a recovery," said Taro Saito, senior economist at the NLI Research Institute.
"I'd say the Japanese economy, which has been in standstill for some time, will start moving forward. We can expect the pace of economic recovery to accelerate further in the first half of this year."
Falling prices The Bank of Japan and the government have been working hard to stimulate the country's economy.
The bank has lowered interest rates to close to zero and injected trillions of yen into the economy in order to boost demand.
The government has also introduced a number of stimulus packages designed to boost growth by creating jobs.
Despite these measures, and the encouraging export figures, some concerns about the country's fragile recovery remain.
The most pressing concern is consumer prices, which have been falling for almost two years.
Deflation is particularly damaging to economic growth because it undermines consumer demand, as individuals tend to wait until prices fall further before making purchases.
And although Japan's economy expanded at an annual pace of 4.5% between July and September, many economists attribute this relatively strong growth to one-off factors.
Most expect growth to have been weaker in the final three months of the year.
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Exports grew by 13% compared with a year earlier, the finance ministry said, an improvement on the 9.1% growth seen in November.
Strong demand in North America for Japanese cars also boosted exports.
Exports are key to Japan's economy and analysts say December's figures bode well for the country's recovery.
November was the first month in nine months that the rate of export growth had increased.
The slowdown between February and October, in part due to a strong yen - which makes exports more expensive - had raised concerns about Japan's economic recovery.
However, the latest export figures have helped to ease some of these fears.
Exports to China grew by 20.1%, while those to the US rose 16.5%.
For 2010 as a whole, exports grew by 24.4%, the first annual expansion in three years.
"Export growth in December is significant - this is a good sign for a recovery," said Taro Saito, senior economist at the NLI Research Institute.
"I'd say the Japanese economy, which has been in standstill for some time, will start moving forward. We can expect the pace of economic recovery to accelerate further in the first half of this year."
Falling prices The Bank of Japan and the government have been working hard to stimulate the country's economy.
The bank has lowered interest rates to close to zero and injected trillions of yen into the economy in order to boost demand.
The government has also introduced a number of stimulus packages designed to boost growth by creating jobs.
Despite these measures, and the encouraging export figures, some concerns about the country's fragile recovery remain.
The most pressing concern is consumer prices, which have been falling for almost two years.
Deflation is particularly damaging to economic growth because it undermines consumer demand, as individuals tend to wait until prices fall further before making purchases.
And although Japan's economy expanded at an annual pace of 4.5% between July and September, many economists attribute this relatively strong growth to one-off factors.
Most expect growth to have been weaker in the final three months of the year.
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