Japan's exports fell 45.6 per cent in March, producing an 11.0 billion yen (US$ 110 million) trade surplus in March. But analysts remain cautious. They observe that the trend is largely due to a drop in imports which fell by 36.7 per cent, a sign that output and consumption are both down.
The result was worse than the surplus of 82.1 billion yen in February, but better than previous four months which were in the red, posting a deficit of 952.6 billion yen (US$ 9.7 billion) in January.
The Bank of Japan will likely lower its projections and say it expects the economy to shrink by between 3 and 5 per cent in the fiscal year ending in March next year.
Plunging demand has saddled companies with too many employees, with unemployment likely to rise from 4.4 per cent.
Manufacturing remains in a difficult situation as well because of its dependency on exports.
Exports to the United States have dropped in fact by 51.4 per cent in March from a year earlier; those to the European Union were down 56.1 per cent.
Exports to Asia, which had previously offset falling exports to the United States and Europe, fell 39.5 per cent. But a slowing pace of decline in shipments to mainland China is a sign that China's huge stimulus package is starting to benefit Japanese exports.
The better-than-expected export figures are raising optimism that markets and output have at least stabilised.
According to economist Richard Jerram, the stage is set for a strong rebound in industrial production and exports in the second quarter of 2009.
Many are also waiting for the government stimulus plan to kick in. Announced this month by Prime Minister Taro Aso, it is worth 15.4 trillion yen (US$ 156 billion).
However, since it will be done by issuing government bonds for 10.8 trillion yen (US$ 110 billion) this fiscal year, some are concerned that it will push up the national debt with dangerous consequences on the long run.