In December, real exports contracted by 0.7%. However, this is probably much more related to capacity shortages than to sluggishness in international trade or competitiveness problems. Japanese manufacturers have been confronted by a surge in domestic demand, as customers bring forward their purchases ahead of the 3-point VAT hike in April. This has allowed them to raise sale prices. Exports prices rose by about 2.5% in December. We should also expect higher prices for consumer goods, excluding energy (to be published on 31 January).
The three-month rate of change in exports, an indicator for the trend, improved to 1.1%. However, this is much slower than world trade growth (2.1% in November according to the CPB World Trade Monitor). In particular, trade (in nominal terms) to the US is showing signs of slowing: 13% y/y in December against to 21.2% in November.
Imports contracted in December, which is rather surprising given the surge in domestic demand. The three-month rate of growth slowed to 1.5% compared to 2.6% in November.
The trade deficit (s.a.) slightly improved to JPY1.1 trillion (or 2.8% of GDP). For 2013 as a whole, it rose to JPY11.5 trillion (or 2.4% of GDP) compared with JPY 6.9 trillion in 2012. This deterioration is largely related to the sharp depreciation of the yen. Between January and December, the yen has lost more than 20% of its value against the US dollar. This has helped exporters to regain competitiveness, but on the other hand has burdened the country’s energy bill.
The trade balance is expected to worsen further in the coming years. Nevertheless, as the income account has remained firmly positive thanks to Japan’s strong foreign asset position, the current account will remain positive in coming years. In 2015, the current account surplus could reach 0.5% of GDP compared with 0.9% in 2013.
BY Raymond VAN DER PUTTEN
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