| Consensus | Consensus Range | Previous | Revised | |
| Balance | ¥-559.60B | ¥-660.00B to ¥-348.70B | ¥301.9B | ¥299.27B |
| Imports - Y/Y | 12.5% | 9.9% to 16.6% | 9.7% | 9.8% |
| Exports - Y/Y | 14.8% | 10.7% to 19.0% | 14.8% |
Market Consensus Before Announcement
Driven by increasing imports in the resource-poor country amid prolonged tensions in the Middle East, Japan’s trade balance is expected to fall into deficit for the first time in four months in May. Robust trade activity is expected to lift export values from a year earlier for the ninth consecutive month and import values for the fourth straight month.
Japanese exports are expected to rise for the ninth consecutive month on the year in May, increasing 14.8 percent after the same gain in the previous month. The April value reached the second-highest level on record at ¥10.5 trillion, led by double-digit percentage gains in shipments of computer chips, non-ferrous metals and engines. Despite stiff U.S. trade tariffs, Japanese exports rose for the second straight month in April, up 9.5 percent, supported by shipments of computer chips, construction and mining equipment, and heavy electrical machinery. Exports to Europe and Asia have also been increasing.
As geopolitical uncertainty persists amid concerns over a blockage of the Strait of Hormuz, Japan has been scrambling to diversify its imports of natural resources away from the Middle East. Coupled with the ongoing weakness of the yen, import values are expected to rise 12.5 percent in May after a revised 9.8% increase in April from the initially +9.7 percent.
Coupled with the yen's weakness despite Japanese authorities' currency intervention efforts in May, elevated international prices of oil, metals and other natural resources have continued to push up import costs for Japan. As a result, Japan's customs-cleared trade balance is expected to fall into deficit for the first time in four months in May, with the trade balance seen posting a deficit of 559.60 billion yen after a revised surplus of 299.27 billion yen in the previous month.
Definition
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.
Description
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.