Japan: Exports fell to multi-year lows on COVID-19 concerns – UOB

Alvin Liew, Senior Economist at UOB Group, assessed the latest Japanese trade balance figures.

Key Quotes

“Japan’s exports continued to contract and by a more severe 11.7% y/y in March…as the coronavirus disease (COVID-19) pandemic spread across major and small economies, disrupting supply chains and constraining demand. This was the 16 th consecutive month of decline, the longest stretch of monthly contraction since 1987 and the worst decline since June 2016.”

“In spite of the weak exports, there was surprisingly a marginal trade surplus of JPY4.6bn for March even though the decline in imports was a more subdued -5.0% y/y .... That said, imports have been on the decline for 11 straight months since May 2019. On an adjusted basis, the trade balance showed a deficit of JPY190bn in March (from a JPY482.2bn in February).”

“Our cautious stance on Japan’s trade outlook has definitely worsened in light of the COVID-19 pandemic and we see Japan facing significant challenges due to the virus impact, on both the supply and demand sides of the economic equation.”

“We have further revised our forecast Japan’s export lower and will now contract by 7.2% in 2020 from previous forecast of -6.8% (+5.6% in 2019) while import is expected to contract by -8.7% from previous forecast of -9% (+5.0% in 2019).”