JP: Merchandise Trade

Tue Jan 23 17:50:00 CST 2018

Consensus Actual Previous Revised
Level Y583.9B Y359B Y113.4B Y112B
Exports-Y/Y 10.0% 9.3% 16.2%
Imports-Y/Y 12.1% 14.9% 17.2%

Japan's merchandise trade surplus widened to Y359 billion in December from Y112 billion in November, falling well short of the consensus forecast for a trade surplus of Y584 billion. The value of Japan's exports increased 9.3 percent on the year in December, slowing from growth of 16.2 percent in November and below the consensus forecast of 10.0 percent. The value of Japan's imports advanced 14.9 percent on the year, also slowing from 17.2 percent in November but above the consensus forecast of 12.1 percent.

Weaker headline exports growth in December was broad-based with external demand slowing from most of Japan's major trading partners. Japanese exports to China rose 15.8 percent on the year in December, down from 25.1 percent in November, with demand also weakening elsewhere in the region. Outside of the region, year-on-year growth in Japan's exports to the United States slowed from 13.0 percent in November to 3.0 percent in December., while exports to the European Union also moderated, up 11.4 percent on the year after increasing by 13.3 percent previously.

Weaker headline imports growth in December was driven by manufactured goods and electrical machinery. These grew by 1.0 percent and 3.0 percent on the year respectively in December after growth of 2.0 percent and 4.6 percent in November. Imports of food, raw materials and machinery also recorded weaker growth. This was partly offset by a stronger year-on-year increase in the value of fuel imports, with higher prices offsetting the impact of a lower volume of petroleum imports.

Annual trade data show Japan recorded a surplus of Y3.0 trillion in 2017, down from a surplus of Y4.0 trillion in 2016. Exports rose 11.8 percent in 2017, up from a drop of 7.4 percent in 2016, but imports growth rebounded more strongly from a fall of 15.8 percent to an increase of 14.0 percent.

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.