August 20, 2014, 13:00 JST

Exports stopped shrinking in July

Japanese exports expanded modestly in July. On a seasonally adjusted basis, the value of exports expanded by 1.8% between June and July. Japanese exports were on a renewed steady slide since December 2013, but the slide seems to have stopped in the last two months.

 Source: MoF, JMA.

Having said that, Japanese exports are still far from being robust. The export volume, after stripping away price effects, has been steadily declining since late 2011. It almost seems that Japanese exporters suffered some kind of a permanent damage in the March 2011 earthquake. In comparison with the prevailing export volume before the earthquake, the current volume is about 10% less. When we consider the improvement in Japanese exporters' export competitiveness due to the weaker yen, the stagnation of Japanese export volume is quite remarkable. There must be a structural factor restraining Japanese exporters from increasing its shipment volume from Japan. 

 Source: MoF, JMA.

Imports did grow in July, but only by 0.7% between June and July on a seasonally adjusted basis. The modest growth of imports implies that the domestic demand must also have recovered at a similar pace in July.

 Source: MoF, JMA.

The trade deficit exceeded 1 trillion yen for two months in a row, on a seasonally adjusted basis. In the immediate aftermath of the earthquake in 2011, we thought that the trade balance would recover a surplus when the Japanese manufacturers rebuild their infrastructure. It now seems that a trade deficit will remain as a permanent feature of the Japanese economy.  

 Source: MoF, JMA.