March Trade Statistics

◆According to March 2016 trade statistics, export value fell for the sixth consecutive month by -6.8% y/y. Export volume in seasonally adjusted terms also continued somewhat of a decline in month-to-month terms. With the exception of the effects of major growth in exports to the EU due to special factors, it would be difficult to claim March results as having shown strength in in any way. Import value declined for the fifteenth consecutive month at -14.9% y/y, especially in the area of petroleum products, while the trade balance was in the black to the tune of +755 bil yen, its second consecutive month of surplus. Looking at the trade balance in seasonally adjusted terms, this was the fifth consecutive month of trade surplus.

◆As for the future of exports, there is a very good possibility that performance will continue to mark time, with some ups and downs along the way. While demand related to household consumption remains favorable, supported by the accommodative financial environment worldwide, performance of materials and capital goods remains weak. This is a reflection of corporate sector demand, which is affected by low operating rates worldwide, and low prices of natural resources. We therefore believe that recovery for exports of materials and capital goods will take quite a bit more time. Meanwhile, caution is required as regards stagnant export value, which is a reflection of the progressively stronger yen since the beginning of the year, since it will likely influence corporate earnings on a yen basis.