JP: Merchandise Trade

Tue Oct 20 18:50:00 CDT 2015

Consensus Actual Previous
Level Y84.4B Y-114.5B Y-569.7B
Exports-Y/Y 3.4% 0.6% 3.1%
Imports-Y/Y -11.7% -11.1% -3.1%

Japanese merchandise trade balance remained a deficit for the sixth month despite expectations that the balance would be a surplus. The deficit was Y114.5 billion after incurring a deficit of Y569.4 in August. On the year, imports plunged 11.1 percent while exports managed to edge up only 0.6 percent. Exports to China were down 3.5 percent but were up 5.1 percent to the EU from a year ago. Exports to the U.S. were up 10.4 percent. The seasonally adjusted deficit was Y355.7 billion. On the month, imports retreated 1.9 percent and exports declined 1.7 percent.

Falling imports and wobbly exports indicate the economy continued to struggle at the end of the third quarter, reinforcing forecasts that the economy may have fallen into another recession. The figures are likely to increase calls for further stimulus from the Bank of Japan, though officials haven't offered any clues that such a move is at all likely.

Merchandise trade balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.

Japan's merchandise trade balance measures visible trade and excludes services. Specifically it is the difference between imports of goods and exports of goods. A positive value indicates a trade surplus (exports exceed imports) while a negative value indicates a trade deficit (imports exceed exports). Movements in the trade balance reflect altered demand for Japanese exports which subsequently impact the yen's value and directly affect GDP growth because of the economy's dependence on trade.

The report gives insight into changing trends regarding Japanese trade. Such developments are especially important for Japan, which is an export-oriented economy that has historically experienced large trade surpluses and any change can have a dramatic effect on the domestic economy. Typically the headline number is the change from the previous year in yen along with the percentage change in exports and in imports from the previous year.