June 2023 Trade Statistics

◆According to June 2023 trade statistics, export value grew for the 28th consecutive month by +1.5% y/y. Motor vehicles and related goods were the leaders, with export value moving toward a moderate growth trend. On the other hand, import value was down by -12.9%, recording a decline for the third consecutive month. As a result, the trade balance was back in the black at 43 bil yen for the first time in 23 months, while the deficit was maintained on a seasonally adjusted basis at -553.2 bil yen.

◆The contribution of overseas demand to the real GDP growth rate during the Apr-Jun period is expected to shift into the positive range. Export volume (seasonally adjusted by DIR) for the same period was up 2.3% y/y, mainly due to a pickup in exports to the EU (+8.6%) and China (+3.7%). On the other hand, import volume increased a relatively small amount at +0.3%.

◆Export volume in June grew for the first time in two months at +3.2% m/m. on average, export volume is moving toward a moderate recovery. Looking at export volume by source of demand, exports to the US were up by +1.5%, with exports to the EU up by +2.5%, and exports to Asia up by +1.1%.

◆Export volume is expected to move toward moderate growth in the future. The composite leading indicator (CLI)(OECD, G20 basis), which is about two months ahead of the Export Volume Index, is showing signs of bottoming out. Positive factors are seen on the supply side as well. With supply constraints easing, exports of automobiles and related goods, for which pent-up demand is accumulating, are expected to drive exports. However, exports of capital goods are expected to remain soft due to high policy rates in the US and Europe.