Japan’s trade account continues to suffer from the same malaise as those for China, Taiwan and South Korea – weak export performance as world trade stagnates, and plunging exports, brought about by weak demand and the slide in commodity prices, especially the cost of energy such as coal, oil and gas.
In Japan’s case, overlaying this is the rising value of the yen, which has crimped exports and added to the fall in the value of imports – and added to the continuing deflationary pressures throughout the economy.
The combination has undermined the so-called economic stimulatory policies of the government of Prime Minister, Shinzo Abe, and the huge quantitative easy and the partial negative interest rate policies of the Bank of Japan.
Figures issued yesterday show the country’s trade surplus rose to its highest level in five-and-a-half years in March.
Exports fell 6.8% year-on-year March, to 6.457 trillion yen ($US59.1 billion), deepening from the 4% fall in February.
Imports though shrank 14.9% year-on-year in March to 5.702 trillion $US52.2 billion), but slightly worse than the 14.2% contraction in February. As a result, Japan’s trade balance for March came in at a surplus of 755 billion yen ($US6.9 billion) compared with a 222.7 billion surplus in March of last year.
The March surplus was still the biggest since October 2010. February’s surplus was the largest since September 2011. It is the sixth month in a row that export growth has been negative, and the 15th consecutive month of contraction for imports – a record which mirrors China’s (although export rose in March).
In value terms, exports of machinery, electrical machinery and chemicals fell at double-digit rates, but car exports surged nearly 16%. Imports of coal, oil, food and machinery all dropped. The fall was boosted by a recent 10% surge in the value of yen against the US dollar, to about 109 yen. That rise is impacting exporters and compounding the deflationary pressures in the wider economy.
Economists say the trade figures will be disrupted in coming months by the earthquakes last week in the southern prefecture of Kumamoto and aftershocks.
Supply chains for a number of companies – particularly those in the semiconductor industry and cars – and affect trade in coming months.
BNP Paribas economists warn that the event has raised the prospect of Japanese GDP growth contracting the June quarter. The yen-denominated value of exports to the US, Europe, Asia and China all rose in March from the previous month, while Europe was the only region Japan imported less from in March.
