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Japan Trade July 2023

Japan: Merchandise exports drop in July, leading trade balance to return to deficit

Yen-denominated merchandise exports fell 0.3% year on year in July, contrasting June’s 1.5% increase. July’s figure marked the sharpest decline since February 2021. Meanwhile, yen-denominated merchandise imports dived 13.5% in annual terms in July (June: -12.9% yoy), marking the weakest reading since September 2020.

As a result, the merchandise trade balance remained slipped into a JPY 0.1 trillion deficit in July from the previous month’s marginal surplus (July 2022: JPY 1.4 trillion deficit).

Analysts at Nomura said:

“After making adjustments for inflation and seasonality, we estimate that real exports increased by 1.3% m-m in July 2023, rising for a second consecutive month […]. In our most recent economic forecasts, we revised up our export forecasts in light of solidity in overseas economies such as the US and a weaker yen than we had previously expected, and we look for an increase in real exports in Jul-Sep. The July results appear to be in line with this forecast.”

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