Japan Trade July 2016


Japan: Strong yen prompts exports to fall in July at fastest pace since 2009

August 18, 2016

In July, nominal exports valued in yen declined 14.0% over the same month last year, which followed the 7.4% decrease recorded in June. The fall was slightly steeper than the 13.8% drop that market analysts had expected and the sharpest contraction since October 2009. Rising global risk aversion has prompted investors to rush into safe-haven assets such as the yen, which strengthened its value against the greenback. This, coupled with subdued global demand, is adding pressure on Japan’s all-important external sector.

Imports contracted 24.7% annually in July, which exceeded June’s 18.8% drop and marked the largest decline since October 2009. Moreover, the print was worse than the 20.0% decrease that market analyst had expected. A strong yen and low energy prices continue to weigh on imports.

As a result, the trade balance recorded a JPY 514 billion surplus (USD 5.1 billion) in July. The reading contrasted the JPY 261 billion deficit registered in the same month of the previous year. In the 12 months up to July, the trade surplus rose to JPY 1.5 trillion, which was up from the JPY 0.7 trillion recorded in the previous month and represented the highest reading since July 2011.

Author: Ricard Torné, Lead Economist

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Japan Trade Chart

Japan Trade12m July 2016

Note: 12-month sum of trade balance in USD billion and annual variation of the 12-month sum of exports and imports in %.
Source: Ministry of Finance and FocusEconomics calculations.

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