By Harumi Taguchi, Principal Economist, IHS Global Insight
JAKARTA - Japan has just released its trade figures for September. Following is the views from IHS Global Insight:
Key Points:
Japan’s trade surplus for September fell 4.2 percent from the previous month to JPY349 billion (US$2.6 billion) on a seasonally adjusted basis, although the trade balance turned to a surplus of JPY498 billion on a non-seasonally adjusted basis. While the month-on-month decline in the trade surplus reflected a slightly larger increase in imports (0.6 percent) than exports (0.3 percent), the trade surplus on a non-seasonally adjusted basis was due to softer declines in exports (-6.9 percent year on year (y/y)), thanks to improvement in export volumes, which rose 2.7 percent y/y.
The improvement in export volumes was due largely to a rebound in exports to the US, rising 4.7 percent y/y from a 5.6 percent decline in August.
Overall exports contracted y/y largely because of declines in motor vehicles, iron and steel products, semiconductors and organic chemicals, while figures increased in textile machines and some other machinery, as well as auto parts and audio/electrical equipment, suggesting improvement in external demand and production.
Imports decreased by 16.3 percent y/y while declines in import prices softened to 16.3 percent y/y, thanks largely to modest improvement in prices of oil and some other resources. Nevertheless, the weakness for import volumes (1.6 percent y/y) was due largely to declines in import volumes of petroleum and other mineral fuels, motor vehicles and computers, pointing to sluggish domestic demand.
IHS Global Insight Views:
Japan’s trade surplus is likely to continue over the near term, but further improvement will be limited due to the modest softening in the yen and improved prices for oil and other resources. Weak domestic demand will partially offset increases in import prices.
The uptick in export volumes highlights bottom in external demand and production, but the sustainability of recovery is still uncertain, given that only moderate growth is expected for the global economy and that the recovery in electrical machinery is being driven largely by the production cycle for new models. (*)