Japanese Exports Turn Positive After 14-Month Slump

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Japan snapped a 14-month run of falling exports in December, with shipments to China setting a record as global demand picks up. The rise left Japan with a trade surplus for a fourth consecutive month.

Key Points

  • Exports rose 5.4 percent in December 2016 from a year earlier.
  • The median estimate of economists surveyed by Bloomberg pointed to a 1.1 percent increase in the value of shipments.
  • Imports fell 2.6 percent over the same period; estimate -0.8 percent.
  • The trade surplus for December was 641.4 billion yen ($5.6 billion).
  • The value of exports to China hit a record high of 1.3 trillion yen.

Big Picture

Any increase in exports helps Prime Minister Shinzo Abe’s efforts to revive Japan’s economy, feeding corporate profits and, ideally, wage gains. But Japan now faces a good deal of uncertainty about the future of trade, including possible U.S. trade barriers, whether aimed at Japan or key trading partner China. President Donald Trump signed an executive order on Monday withdrawing the U.S. from the Trans-Pacific Partnership trade agreement, which counted Japan among its signatories, and has said Japan is among countries engaging in unfair trade with the U.S.

Economist Takeaways

  • "Demand in Asia remained strong, especially for smartphones," said Masaki Kuwahara, senior economist at Nomura Securities Co. "China’s growth has been resilient with stimulus measures.”
  • "Exports will push up Japan’s growth rate for the first half of this year," Kuwahara said.
  • "The robust pickup in exports reflects a pickup throughout the global economy--from the U.S., Europe and emerging nations," said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc. in Tokyo. "The global recovery is likely to continue to support Japan’s economy."
  • "The first rise in export values in more than a year reflects a combination of soaring export volumes and the recent depreciation of the yen," Marcel Thieliant, senior Japan economist at Capital Economics, wrote in a note.

The Details

  • Exports to the U.S. rose 1.3 percent from a year earlier.
  • Those to the EU fell 4 percent.
  • Exports to China, Japan’s largest trading partner, jumped 12.5 percent.
  • Shipments to China of auto parts, electrical circuits each rose 38 percent by value.
(Adds details on exports to China.)
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