March Trade Statistics

◆According to March trade statistics, export value grew for the fourth consecutive month at +12.0% y/y, while at the same time exceeding market consensus at +6.2%. Export volume in y/y terms grew less than in the previous month (+6.6% in March as compared to +8.3% in February), but export price grew more than in the previous month (+5.0% in March as compared to +2.8% in February).

◆Export value in seasonally adjusted terms suffered a decline for the first time in eight months at -3.5% m/m, while export volume declined for the first time in two months at -2.8% (seasonal adjustment by DIR). Looking at export volume by source of demand, exports to the US were down by -1.4%, while exports to the EU were also suffered a decline for the first time in two months at -1.3%. Exports to Asia were also down for the first time in two months at -7.3%. Exports to Asia were seen as suffering from a reactionary decline in relation to the brisk performance seen in February in association with the Lunar New Year celebrations in the Sinosphere.

◆FY2016 trade balance was back in the black for the first time in six years at 4 tril yen due to the decline in import value.

◆As for the future of exports, we see moderate growth continuing due to the underlying strength of overseas economies. However, we advise caution as regards risk factors associated with uncertainty regarding the US trade policy under the new Trump administration. If trade friction arises between Japan and the US, Japan’s export-driven industries could be hard hit.