Japan: Exports grow at a milder pace in July
Yen-denominated merchandise exports rose 37.0% on an annual basis in July, slowing slightly from June’s 48.6% surge. Meanwhile, imports increased 28.5% in annual terms in July, moderating from June’s 32.7% rise. Both of July’s readings were aided by a healthy base effect, with July 2020 having coincided with a sizeable pandemic-induced decline in trade volumes.
As a result, the merchandise trade balance improved, recording a JPY 0.4 trillion surplus in July (June 2021: JPY 0.3 trillion deficit; July 2020: JPY 0.1 billion deficit). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a JPY 4.2 trillion surplus in July, compared to the USD 3.8 billion surfeit in June.
Regarding the outlook for the external sector, analysts at Nomura commented:
“Real exports appear to have been hampered in July by economic conditions overseas, where the pandemic has resurged, and we expect the situation to continue for now. […] However, vaccination rates are also increasing in many countries, and as vaccination rollout is expected to enable the easing of restrictions on people’s movements […] we think economies outside of Japan will once again enter a recovery path. We forecast a return to accelerated recovery in real exports on a qoq basis from October–December.”