Japan Trade Balance October 2022


Japan: Trade deficit widens as merchandise exports grow at weaker pace in October

November 17, 2022

Yen-denominated merchandise exports rose 25.3% over the same month last year in October, weaker than September’s 28.9% jump. Meanwhile, merchandise imports shot up 53.5% in annual terms in October (September: +45.7% yoy).

As a result, the merchandise trade deficit widened to JPY 2.2 trillion (USD 14.5 billion) in October from JPY 2.1 trillion in September (USD 14.5 billion; October 2021: JPY 0.1 trillion (USD 0.8 billion)).

Analysts at Nomura commented:

“We think the prospect of an economic slowdown overseas is something that anyone forecasting Japan’s exports will need to take on board. October manufacturing PMI readings for the euro zone and China were below the line at 50 that divides expansion from contraction. We forecast that the economic slowdown will send Japan’s real exports of goods and services (as they appear in the GDP data) into a month-on-month downtrend once 2023 gets under way.”

Analysts at EIU commented:

“The latest development is consistent with our view that Japan will post a sizeable trade deficit in 2022. Nevertheless, there is room for improvement in the coming months as the yen has recovered against the US dollar. Optimism is rising that US consumer price inflation may have peaked and the Federal Reserve (the US central bank) could be ending its monetary tightening in the first quarter of 2023. This optimism is driving the current yen strength, which we expect to last well into 2023 and will help to relieve import price inflation, thus leading to a narrowing trade deficit in the months ahead.”

Our panelists forecast that exports will increase 2.0% in 2023 and imports will contract 1.9%, bringing the trade balance to a deficit of USD 31.7 billion. In 2024, our panelists expect exports to expand 8.5% and imports 5.4%, prompting the trade balance to log a deficit of USD 9.6 billion.


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