(SOUNDBITE) (English) REUTERS ASIA ECONOMICS AND MARKETS EDITOR, WAYNE ARNOLD, SAYING:

"Keep an eye out next week for Japan's trade numbers. These will be the August trade figures, and we'll look at the export numbers for two things: a sign of how Japan's economy is doing, and how the global economy is starting to pick back up."

On the Japan side it looks pretty good because in yen terms, Japan's exports are doing pretty well.

Even though exports are a small percentage of GDP for Japan, that's very good news because they have an outsized impact in sentiment both in terms of corporate spending and in terms of consumer expenditure.

(SOUNDBITE) (English) REUTERS ASIA ECONOMICS AND MARKETS EDITOR, WAYNE ARNOLD, SAYING:

"Exports are only, say, 15-20% of GDP. And net exports are actually even smaller than that. So, theoretically, in terms of actually GDP growth - which is what we look at in the economy - that is very small."

But if exports are doing really well, two things happen: Japan's largest companies make more money.

And since they hire a lot of people, and they spend a lot of money on other companies which hire a lot more people after that, everyone starts to feel better when they hear that exports are doing really well.

In addition, stocks go up. Those companies start to make more money, and they're the biggest stocks on the Japanese stock market.

Most Japanese have some money in the stock market.

If their stock prices are going up, just like you and me they feel wealthier even if they are not really making more money. So they are likely to spend more money.

So it is very good psychologically for the economy when exports do well, especially in an economy where they are just used to thinking about exports as being extremely important.

(SOUNDBITE) (English) REUTERS ASIA ECONOMICS AND MARKETS EDITOR, WAYNE ARNOLD, SAYING:

"In dollar terms - remember the yen has been falling significantly - in dollar terms things don't look so good. In fact they look almost a mirror image of the yen figures. Exports are still falling in dollar terms, meaning that demand is still very, very weak. The U. S. is still shrinking, but not as much. Europe is getting actually worse, and China is still falling."

So you have to start to wonder whether the long-awaited export rebound in Asia is happening.

Remember Japan is the exporter of the most sophisticated value-added exports in terms of electronics and automobiles to the rest of the world.

That those aren't doing good could mean trouble down the line for the rest of the region.

ENDS

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