October Trade Statistics

◆According to October 2014 trade statistics, export value grew for the second consecutive month at +9.6% y/y, considerably exceeding market consensus at +4.5% y/y. This was due to export volume having grown for the second consecutive month at +4.7% y/y, along with a progressively weaker yen which increased the extent of growth in export price to +4.6% y/y (it was +4.0% last month). As a result the seasonally adjusted figure for export value grew by +1.9% m/m, its fifth consecutive month of growth, thereby strengthening the growth trend.

◆The export volume index in seasonally adjusted terms (DIR) also grew for the second consecutive month at +2.3% m/m. Export volume had been marking time up till now, but is beginning to show signs of a comeback due to the steady undertone of overseas economies and the gradual decline of the export price index on a contract currency basis (local prices in Japanese export destination countries).

◆Export volume is expected to gradually move toward a growth trend in the future, as overseas economies recover. However, as of this point, there are increasing signs that overseas economies are facing a slowdown, so attention should be paid to increasing risk of a delay in recovery. Japan is expected to continue running a trade deficit with a comeback in import volume associated with expanding domestic demand and increasing import value. However, in the midterm, the trade deficit is expected to gradually shrink as a result of improved export volume supported by recovery in overseas economies.