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Japan Trade Balance May 2021

Japan: Exports skyrocket in May on low base effect

Yen-denominated merchandise exports soared 49.6% annually in May, on the back of April’s 38.0% jump. May’s reading marked the strongest increase in over 30 years, although it was aided by a healthy base effect, with May 2020 having coincided with a sharp pandemic-induced decline in trade volumes. Meanwhile, imports jumped 27.9% on an annual basis in May (April: +12.8% yoy), marking the best result since May 2010.

As a result, the merchandise trade balance fell to a JPY 0.2 trillion deficit in May (April 2021: JPY 0.3 trillion surplus; May 2020: JPY 0.9 trillion deficit). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a JPY 3.2 trillion surplus in May, compared to the JPY 2.5 trillion surplus in April.

Regarding the outlook for the external sector, Makoto Tsuchiya and Shigeto Nagai, economists at Oxford Economics, commented:

“While supply chain disruptions in the car industry will continue to exert pressure on the sector in the short term, we are optimistic about the overall external outlook as robust Chinese demand, a buoyant manufacturing sector, and US President Joe Biden’s fiscal plans will all provide support.”

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