Japan: Exports increase at a softer pace in August
September 16, 2021
Yen-denominated merchandise exports rose 26.2% year-on-year in August, following July’s 37.0% jump. While August’s result marked sixth consecutive month of double-digit export growth, the reading was still the weakest increase since March. Meanwhile, imports jumped 44.7% on an annual basis in August (July: +28.5% yoy), marking the best result in over three decades. However, both of August’s readings were aided by a healthy base effect, with August 2020 having coincided with a sizeable pandemic-induced decline in trade volumes.
As a result, the merchandise trade balance deteriorated, recording a JPY 0.6 trillion deficit in August (July 2021: JPY 0.4 trillion surplus; August 2020: JPY 0.2 billion surplus). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a JPY 3.4 trillion surplus in August, compared to the USD 4.3 billion surfeit in July.
Regarding the outlook for the external sector, analysts at Nomura commented:
“The slump in automobile exports appears to have had much to do with the weakness in Japan’s real exports in August, and with automobile production cuts continuing into September, we think it is likely that the September trade statistics will show further weakening in exports. [However], we continue to forecast that growth in Japan’s real exports in the October–December quarter will come in on the high side, with overseas economies opening up just as Japan’s automobile output normalizes.”
Author: Stephen Vogado, Economist