Naoki Murakami, chief economist at Monex Securities, told the AFP news agency that the finance ministry data on Wednesday "confirmed exports were recovering" after volumes increased for two consecutive months.

Japan's factory production rose for the first time in six months in March and data due out on Friday is expected to show the first back-to-back increases in output in more than a year in April.

Stronger shipments to China

"Exports are likely to recover gradually from now on and the Japanese economy is expected to follow suit"

Yoshiki Shinke,
senior economist, Dai-ichi Life Research Institute

Shipments to China, Japan's biggest trade partner, fell 25.8 per cent in April from a year earlier, narrowing the margin of decline for a third straight month and suggesting Beijing's $585bn stimulus package was having an effect.

Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute, said the positive signs were due to "progress in inventory correction overseas and a pickup in shipments to China".

"Exports are likely to recover gradually from now on and the Japanese economy is expected to follow suit," he told the Reuters news agency.

Japan posted an annual deficit last year, its first in 28 years. And last week it announced that its economy suffered its sharpest contraction on record in the three months to March, shrinking four per cent compared with the previous quarter.

The Japanese government has tried to stimulate spending and increase output [AFP]
In an effort to ease the recession, the government has announced a series of economic stimulus packages, including a $163bn injection unveiled last month.

The government upgraded its assessment of Asia's biggest economy for the first time in more than three years this week, saying that while the situation was still tough "the tempo of worsening has become moderate".

Masaaki Shirakawa, the Bank of Japan governor, said on Monday that the country's economy may return to positive growth in the quarter to June, predicting a "mild recovery".

Caution

Some analysts remain cautious, however, on whether global demand will recover enough to prompt Japanese companies to go beyond restocking after a heavy run-down of inventories.

Monex Securities' Murakami conceded that "the pace of the recovery in exports is not very strong".

And Takeshi Minami, the chief economist at Norinchukin Research Institute, told Reuters that "China's economy is doing better than other countries mostly because of government spending".

"But like Japan, China's economy is driven mostly by exports, so unless we see a stable pickup in global demand its recovery will be limited.

"That bodes ill for Japanese companies," Minami added.