October 22, 2014, 21:30 JST

Japanese exports grew in September thanks to yen depreciation

September trade data provided some moderately positive news for Japan. Japanese exports in September was up 6.9% year on year (YoY), the highest growth in the last 8 months. Exports to China was up 8.8% YoY, exports to US was up 4.4% YoY. After a seasonal adjustment, Japanese exports are at its largest level since October 2008.

 Source: MoF, JMA.

 Source: MoF, JMA.

What we need to bear in our mind though, is that these upturn are still mostly mere nominal phenomenon, rather than real growth in the quantity of exports. As yen depreciated, nominal value of exports measured in yen grew, even as the real quantity of exports remains basically unchanged. Real exports did grow somewhat in the last few months, but it still seem to remain range-bound.

 Source: MoF, JMA.

Imports grew by 6.2% YoY in September. Imports stagnated for a few months after April this year as the sales tax were raised to 8%. Weak domestic demands were obviously reflected on Japan's demand for imported goods.

 Source: MoF, JMA.

Imports seem to be on a moderate recovery trend though. In September, real imports grew by 4% from August. As a proxy for Japan's domestic demand, the sizable growth in real imports we saw in September is encouraging. The recovery in the economy after the sales tax hike was somewhat slower in coming than public officials expected, but it seems to be in the pipeline. The recovery in the private consumption will probably be slow, as Japanese household continue to suffer from decline in their real wages, but with some help from corporate capital investment and possibly from an additional fiscal stimulus, Japanese domestic demand could manage to show some weak but positive growth in the next few quarters. 

 Source: MoF, JMA.