July 2022 Trade Statistics

◆According to July 2022 trade statistics, export value grew for the seventeenth consecutive month at +19.0% y/y, exceeding market consensus at +17.6%. As supply constraints eased up, export recovery in motor vehicles progressed. On the other hand, import value rose significantly at +47.2% y/y. As a result, the trade balance was in the red for the twelfth consecutive month at -1,436.8 bil yen, a historic high of -2,133.3 bil yen in seasonally adjusted terms.

◆Export volume in July (seasonally adjusted by DIR) marked time in comparison with the previous month. While motor vehicle exports recovered due to the easing up of supply constraints, exports of intermediate goods to the US brought downward pressure on overall performance. Looking at export volume by source of demand, exports to the EU were up by +7.4% m/m, with Asia up by +1.4%, while export volume to the US shifted into decline at -4.1%.

◆Export volume is expected to move toward moderate growth in the future. The normalization of China’s economy is expected to bring progress in mitigation of the difficulty of procuring parts, and motor vehicle exports, along with intermediate goods and capital goods, will likely continue to get back on track. On the other hand, there is a slowdown in consumption of goods in the US and monetary tightening has commenced in Europe, where there is also uncertainty regarding energy supplies. China remains on the alert in regard to the possible resurgence of COVID-19 infections. Major unknown factors affecting overseas demand continue to be a concern, hence caution is required.