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Sharp Japan export slowdown dents 'Abenomics', flags Asia weakness

* Sept exports up 11.5 pct vs f'cast 15.6 pct

* Export volume slumps as Asia slowdown hits

* BOJ Kuroda says Japan's economy to keep recovering

* Taiwan Sept export orders also flag Asia weakness

By Leika Kihara and Tetsushi Kajimoto

TOKYO, Oct 21 (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


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 industrialised 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



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.

"I am a little worried about emerging markets, particularly

emerging Asia," Kushida told reporters after the meeting.