By Leika Kihara and Tetsushi Kajimoto
TOKYO (Reuters) - Japan's export growth fell well short of expectations in September as the country posted a record run of trade deficits, a sign that slowing demand in Asia is taking the shine off Prime Minister Shinzo Abe's stimulus policies.
In volume terms Japan's exports fell on the month, adding to the weak picture for Asia's trade-reliant economies, after China last week reported a surprise slide in exports for September.
Taiwan's export orders - a leading indicator of activity over the next two or three months - highlighted similar signs of slowing demand in the region.
"There is really no change in the main thing that's going on across Asia - which is no growth in exports the past two years. I think it's weak global spending, it's as simple as that," said
Tim Condon, regional economist for ING in Singapore.
A sharp drop in Japan's export volume despite the boost from a weak yen, which lifts the competitiveness of Japanese goods, could curb third-quarter economic growth.
Japanese policymakers are counting on overseas growth to pick up in time to make up for an expected slump in personal spending after the sales tax is raised next April.
Persistent trade gaps in Japan also add to concerns the country could end up spending more overseas than it earns, adding to strains caused by the country's debt burden, the heaviest among industrialized nations.
Exports rose 11.5 percent in September from a year earlier, less than a median market forecast for a 15.6 percent increase, trade data from the Ministry of Finance showed.
A notable slowdown was in exports to Asia, which rose just 8.2 percent after increasing 13.5 percent in August, suggesting that weak demand in countries such as Indonesia and Thailand - big markets for Japanese automakers - was taking a toll.
Real exports, which the BOJ calculates by stripping out the effect of price changes, is considered a good indicator of volume trends. They fell 4.4 percent from the previous month.
With the weak yen inflating the cost of importing fuel, Japan logged a trade deficit of 932 billion yen ($9.5 billion) in September, running a negative balance for the 15th straight month.
SIMILAR PATTERN IN CHINA TRADE
China's latest trade data showed a similar pattern, with exports down 0.3 percent in September from a year earlier. Shipments to Southeast Asia, China's fastest growing market in the past year, dived to a 17-month low.
Data from Taiwan on Monday showed export orders from China, Japan and Southeast Asia all contracted last month, though overall orders rose 2 percent on-year on demand from Europe and the United States.
Japan's economy expanded for three straight quarters in April-June as Prime Minister Shinzo Abe's stimulus policies boosted business sentiment and personal consumption. Analysts expect Japan to avoid a sharp downturn in the third quarter as robust domestic demand continue to offset softness in exports.
The Bank of Japan on Monday raised its assessment for all nine regional economies and its governor stressed that the world's third-largest economy will continue to recover - due mostly to robust domestic demand.
"Japan's economy is making steady progress toward achieving the BOJ's 2 percent inflation target," BOJ Governor Haruhiko Kuroda told a quarterly meeting of the bank's branch managers.
But Shigeki Kushida, who as head of the BOJ's Osaka branch oversees the Kinki region of western Japan, said exports lacked momentum in his area, which is home to electronics giants such as Panasonic Corp <6752.T>.
"I am a little worried about emerging markets, particularly emerging Asia," Kushida told reporters after the meeting.
(Additional reporting by Stanley White and Izumi Nakagawa, and Michael Gold and Emily Chan in Taipei; Editing by Eric Meijer, Richard Borsuk and Michael Urquhart)