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February 2018 Trade Statistics

Export growth is sluggish even when averaged out in consideration of Lunar New Year

Yota Hirono

Shunsuke Kobayashi

Summary

◆According to February 2018 trade statistics, export value grew by +1.8% y/y, while market consensus was at +1.4%. This represents a major decline in growth rate in comparison to the previous month (+12.3%). China export value for January and February maintained growth of +7.5% for the total of those months. This puts y/y growth in the single digits for the first time since January 2017 due to the major influence of the Chinese Lunar New Year period. Performance lacked strength even when averaged out.

◆Export volume (seasonally adjusted by DIR) was down for the first time in two months at -4.4% m/m. Looking at export volume by source of demand, exports to Asia (-6.5% m/m) brought downward pressure on overall performance, while exports to the EU were also down at -4.3%. On the other hand, positive factors included exports to the US (+5.8% m/m). Meanwhile, looking at export volume to China based on the total of January and February, we see performance of +3.6% y/y, which represents a slowdown in comparison to the double-digit growth experienced continually between February and December of 2017. Hence weakness was seen in the area of volume as well.

◆As for the future of exports, we see underlying strength continuing for the overseas economy bringing moderate growth in Japan’s exports. As for China’s economy, many factors which could lead to a future slowdown are present, while favorable economic performance in the US and the EU is a factor which should lead to moderate growth in exports. The main point of concern is that US intentions to move toward protectionism have begun to appear with import restrictions to be implemented in regard to iron & steel, and aluminum. News reports state that the US is now in negotiation with a number of countries which hope to be named as exceptions to the new restrictions, and we are keeping a close watch on future developments.

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