Japan's exports, the traditional motor of the country's sputtering economy, slipped slightly in June, sparking renewed worries about the fragile recovery.

For the first time in six months, June's figures showed Japan exported less - 3.9% less - than the month before.

While the figures still showed an 8.9% gain on the same month last year, the fear is that the steadily weakening dollar - not to mention the relentless slide of world stock markets and the near-panic about corporate governance in some quarters of the US - are combining to torpedo the turnaround from ten years of decline.

A slide in imports of 5.1% year on year is compounding the concern, because it indicates that Japanese consumers are still nowhere near ready to take up the slack if the rest of the world falters.

Out of balance

Japan's trade surplus - the excess it exports over what it imports - has historically been huge compared to the rest of the world.

The country's breakneck growth from the Second World War till the end of the 1980s was fed by exports, first of steel and other hardware and later by consumer electronics, cars and computers.

And even now on a year-by year basis the trend is for increasing surplus, thanks to last year's dismal showing, with June's figure of 1.3 trillion yen ($11.1bn; �7.1bn) marking a 71.6% rise over the same month in 2001.

But the surge in the yen from below 130 to the dollar to around 115 in the past couple of months is making exports more expensive to overseas customers.

Although the effects so far are marginal, observers say the impact is likely to be felt later in the year, when Japan's current growth - an impressive 5.7% if the January-March performance were continued for 12 months - will probably evaporate.

""We're probably not going to get any of the bad effects from either the strengthening of the yen or the potential slowdown in overseas growth until the second half of the year," said Lehman Brothers Japan's Matthew Poggi.

But he added: "We have trade turning from a positive contributor to growth to a neutral contributor in the fourth quarter."

Bank jitters

Bank of Japan governor Masaru Hayami echoed the concerns in a quarterly meeting of the bank's regional managers.

While the economy was close to turning the corner, he said, it remained highly vulnerable to the big picture worldwide.

And he reiterated that without reforming the banking system, still overburdened with bad debts built up in the go-go-1980s, a long-lasting recovery was unlikely.