December Trade Statistics

◆December 2013 trade statistics recorded the tenth consecutive month of export gains, with exports boasting 15.3% y/y growth, but fell below market consensus (+18.0%). Export amount in terms of price was +12.4% y/y continuing major gains, while export volume was up 2.6% y/y, third month in a row of y/y gains, helping to push up total export amount. In seasonally adjusted terms export amount was up 1.7% m/m, making this the third month in a row of m/m growth.

◆Export volume index on a seasonally adjusted basis (DIR) fell for the first time in 3-months on a m/m basis, recording -1.2%. Export volume to the EU showed significant growth at +8.9% m/m, while exports to the U.S. fell 5.8% m/m, and those to Asia showed a m/m decline of 2.0%, helping to push overall figures downward.

◆We project that export volume to all regions will be picking up. Though one hears rumors that the J-curve effect is losing its hold due to the weakening yen, the example of past incidences of yen depreciation tell us that it takes time for the trade balance to move significantly into the black. We see a continued recovery in export volume, which will lead in turn to the gradual taking hold of a downward trend in the trade deficit. We believe there is a very good possibility that the trade deficit will begin to gradually shrink after the middle of 2014.