February Trade Statistics

◆According to February 2014 trade statistics, export volume recorded its 12th consecutive monthly gain in monetary terms at +9.8% y/y, but fell below market consensus (+12.4%). Even so, results were considered to be positive overall. Export price was up 4.2% y/y, a decline in comparison to last month’s growth. On the other hand, export volume grew in y/y terms for the first time in two months at +5.4%, providing upward thrust for exports. In seasonally adjusted terms export amount grew for the first time in two months, registering +2.8% in month-to-month terms.

◆Export volume index on a seasonally adjusted basis (DIR) grew for the first time in 3 months at +3.4% m/m. By region, exports to Asia grew +5.1% m/m helping to push the overall figures up. On the other hand, US figures were down by 3.4% m/m in addition to the EU, which fell by 0.7% m/m.

◆We expect that export volume will continue to pick up. If import volume in the advanced economies begins to recover, Japan’s exports to those countries should gradually strengthen their growth trend as well.

◆As for what the future holds, import volume is expected to continue growing, reflecting the expansion of the domestic economy This in turn will contribute to the continuation of the current trend in the trade deficit. However, exports are expected to begin picking up when imports take a short breathing spell after their peak due to last minute demand, and imports may very well continue this decline. Hence we expect the trade deficit to gradually shrink after the middle of 2014.