December Trade Statistics

◆According to December trade statistics, export value grew by +9.3% y/y, while market consensus was at +10.0%, registering a lower growth rate than the previous month (+16.2%). The Japan Customs rate in December was 112.48 yen/dlr, representing yen appreciation of 0.7% in y/y terms.

◆Export volume (seasonally adjusted by DIR) won growth for the third consecutive month at +0.7% m/m. Looking at export volume by source of demand, exports to the EU (+3.9%) provided leverage for overall performance. The biggest performers in exports to the EU were computer parts and iron & steel, both of which helped to push up overall results. On the other hand, factors bringing negative pressure on results included exports to the US (-1.5%) and exports to Asia (-1.0%). As for exports to the US, a decline in autos and auto parts had a major negative effect. Meanwhile, exports to Asia saw a decline in semiconductor and other manufacturing equipment, as well as iron & steel, which brought downward pressure on overall results.

◆As for the future of exports, we see underlying strength continuing for the overseas economy bringing moderate growth in Japan’s exports. However, caution is urged regarding trends in monetary policies in the US and Europe. In the US, the Fed is continuing its tight money policy, and the ECB began further reducing its asset purchases in January this year. There is a strong possibility that normalization of monetary policy by central banks in the US and EU could bring downward pressure on those economies, hence caution is advised.