Japan’s trade balance is expected to have remained in surplus in February 2016. The surplus is likely to have reached +JPY462bn, a rebound from the trade deficit of JPY430bn in February 2014. Japan’s trade balance, on a seasonally-adjusted basis, is expected to have reached a surplus of JPY328bn, remaining in surplus for the fourth consecutive month.
This is due to a considerable decline in oil prices and a cyclical rebound in exports after bottoming out, partially because of yen’s previous depreciation. Japan’s trade balance had turned to a deficit since the 2011 East Japan earthquake disaster. Certain nuclear power plants have restarted operations. Japan’s energy costs are expected to be suppressed. While developed nations show continued economic rebound, developing nations are likely to eventually move out of their deceleration phases.
“We expect export growth to improve to -3.9% yoy in February after large deterioration (- 12.9% yoy) in January”, says Societe Generale.
The real export data by geographic areas suggest that Japan’s exports to Europe, North America and China appear to have reached bottom already. Meanwhile, exports to emerging economies have continued to be sluggish. During the February-end G20 meeting, the nations had agreed to promote policy measures such as stimulative fiscal policy. It needs to be observed carefully if global economic uncertainty will be reduced and also if Japan’s exports will rebound.
Meanwhile, Japan’s import growth is expected to have changed little at -17.6% y/y, the sixth consecutive monthly drop of over 10%. The further drop in oil prices in January led to an additional decline in import growth. In 2014, fuel imports had reached a peak of JPY27.7tn and dropped to JPY18.2tn in 2015.
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