Japan’s Abe heads to Argentina on trade

Buenos Aires / AFP

After the APEC summit in Lima, Japan’s Prime Minister Shinzo Abe is in Argentina to bolster bilateral trade and investment ties with Latin America’s third largest economy.
It was the first visit to Buenos Aires by a Japanese prime minister in 57 years —the last one to make the trip was Abe’s grandfather, Nobusuke Kishi, in 1959.
Japanese companies have a big presence in the South American nation especially in the automobile industry—with Honda, Toyota and Nissan.
The Toyota plant alone produces 20 percent of the vehicles sold in Argentina.
This is a big turning point for Japan. It is forecasting a surge in investment in Argentina, from $100 million a year now, to at least $2 billion annually for three years, according to the ambassador of Japan to Argentina.
While visits by prominent international leaders were infrequent during the presidency of Nestor and then Cristina Kirchner (2003-2015), heads of state and government have been flocking since Mauricio Macri took office in December 2015.
Prior to Abe, French President Francois Hollande, his US counterpart Barack Obama, Italian leader Mateo Renzi and Canadian Prime Minister Justin Trudeau traveled to Buenos Aires this year.
The head of the Japanese government will be received by center-right president Mauricio Macri and will meet with business leaders and representatives of the local Japanese community in Argentina, which numbers around 65,000.
Prior to attending the Asia-Pacific Economic Cooperation (APEC) summit, Abe was the first leader to meet with US President-elect Donald Trump on Thursday in New York. Abe called Trump “a leader in whom I can have great confidence.”
Japan is one of Washington’s closest allies, but Trump alarmed Tokyo during the campaign by musing about pulling the thousands of US troops from the region, and suggesting that officially pacifist Japan may need nuclear weapons.
Japan logs $4.47 bn trade surplus in October
Japan saw its second consecutive trade surplus in October, official data showed on Monday, though it came in below expectations as a strong yen dented exports.
While the yen has tumbled in November on the back of Donald Trump’s US election win, it was up almost 15 percent on-year against the dollar last month, which the finance ministry said hit export values for key products such as vehicles and steel.
However, the weak reading was offset by a fall in imports, with crude oil and liquefied natural gas down significantly, according to the ministry.
The country posted a surplus of 496.2 billion yen ($4.47 billion), smaller than the 610 billion yen forecast in a Bloomberg News
survey.
“Even though the drag from the stronger yen has started to fade, the annual growth rate of both export and import values fell deeper into the red last month,” Marcel Thieliant, senior Japan economist at Capital Economics, said in note.
Japan last week reported the world’s number-three economy expanded more than expected in the third quarter as exports offset slack consumer spending, some rare good news for Prime Minister Shinzo Abe’s struggling growth drive.
Analysts said Japan’s exports are expected to give a boost to economic growth in October-December because of the sharply weaker yen.
Traders are shifting out of the yen and into the dollar on expectations Trump’s plans to ramp up infrastructure spending and cut taxes will fan inflation, which will in turn force the Federal Reserve to lift interest rates.
“Looking ahead, the yen has weakened sharply since the US elections and we expect it to decline further next year, which should lift trade values,” Thieliant said.