JAKARTA (TheInsiderStories) – Japan’s trade balance turned to deficit of JPY943 billion (US$9 billion) on a non-seasonally adjusted basis in January, but the balance remained in surplus at JPY373 billion (a 311.7 per cent rise from the previous month) on a seasonally adjusted basis.
The non-seasonally adjusted trade deficit was due largely to Japan’s end-of-year and New Year holidays, although the year-on-year (yoy) growth in exports rose 12.2 per cent, outpacing imports (up 2.6 per cent yoy).
The increase in exports was thanks to accelerated yoy growth in export volumes (up 9.2 per cent) even though upside from the yen’s weakening has waned, which partially reflected the Lunar New Year holidays in Japan’s trading partners.
Although growth in exports to the US softened to 1.2 per cent yoy, exports to the European Union and China accelerated to 20.3 per cent yoy and 30.8 per cent yoy, respectively.
Major contributors to the increase in what were motor vehicles as well as semiconductor machineries, power generating machineries and other machineries whose growth remained solid. While the contribution from mineral fuels declined to 2.2 percentage points of overall import growth,imports from China declined 3.3 per cent, the first drop in eleven months.
Harumi Taguchi, Principal Economist, IHS Markit share said, although recent rapid yen appreciation and trade partners’ Lunar New Year holidays could slow Japan’s exports in February, the overall trend for exports is likely to remain solid thanks to sustained brisk machinery orders from overseas, which will contribute to maintaining Japan’s trade surplus over the near term.
That said, momentum of exports is likely to gradually ease in tandem with softening growth of exports of electrical parts and devices, reflecting Apple’s plan to cut the iPhone X production, as well as machinery, in response to increasing production by overseas manufacturers who imported machinery from Japan.
More than half of exports and imports are contracted on the US dollar. Therefore, the initial effect of yen application is reducing both export and import prices.