JP: Merchandise Trade

May 21, 2017 06:50 CDT

Consensus Actual Previous
Level Y529.7B Y481.7B Y614.7B
Exports-Y/Y 8.0% 7.5% 12.0%
Imports-Y/Y 14.4% 15.1% 15.8%

Japan's merchandise trade surplus narrowed to Y481.7 billion in April from Y614.7 billion in March, falling short of the consensus forecast of Y529.7 billion. The value of Japan's exports increased 7.5 percent on the month in April, down from 12.0 percent on the year in March, and below the consensus forecast of 8.0 percent. The value of Japan's imports recorded growth of 15.1 percent on the year, also down from 15.8 percent in March but above the consensus forecast of 14.4 percent.

Exports to most of Japan's major Asian trading partners again showed strong growth on the year in April. Exports to China grew by 14.8 percent, the sixth consecutive year-on-year increase, with exports to Korea, Taiwan and ASEAN countries up 22.3 percent, 14.7 percent, and 6.7 percent respectively. The escalation in tensions with the North Korean regime during April does not appear to have had a significant impact of regional trade flows. As was the case in March, demand was more subdued but still positive elsewhere, with exports to the United States and the EU both recording positive year-on-year growth for the third consecutive month, up 2.6 percent and 2.2 percent respectively in April.

Headline imports growth was largely driven by fuel imports, up 58.7 percent on the year in April, with imports of other raw materials also showing solid growth of 13.2 percent. Electrical machinery imports, up 16.0 percent on the year, also made a significant contribution to headline growth, partly driven by a large increase in the volume of telephone imports.

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.