April 2022 Trade Statistics

◆According to April 2022 trade statistics, export value grew for the fourteenth consecutive month at +12.5% y/y, while at the same time falling below market consensus at +13.9%. As for import value, major growth continued at +28.2% y/y due to highs in energy prices and other imports. As a result, the trade balance hit -839.2 bil yen, or -1,618.9 bil yen in seasonally adjusted terms. This is the second largest trade deficit Japan has experienced since May 2012.

◆Export volume in April (seasonally adjusted by DIR) suffered a decline for the first time in three months at -2.5% m/m. Looking at export volume by source of demand, exports to the US were down by -4.4%, with the EU down by -4.0%. This may be partly due to a reactionary decline in comparison to the sharp growth seen recently. In contrast, export volume to Asia shifted into growth at +0.8%. However, the exception was in exports to China, which suffered a major decline for the first time in two months.

◆Export volume is expected to continue marking time in the future. The strict Zero-COVID policy in China is expected to continue for the time being, and this will cause Japan’s exports to China to continue to be sluggish. Recovery in Japan’s exports will depend on how China does in holding down infections in the future. We also need to be wary of the possibility that the slowdown in the Chinese economy, as well as the Ukraine crisis, could put pressure on the global economy and indirectly bring downward pressure on Japanese exports.