Lower Import Bill Aids Further Recovery In Trade Position

Japan April trade data was reasonably close to expectations. Export growth was 2.6% y/y, versus 3.0% forecast (4.3% prior). Imports fell slightly more than expected to -2.3% y/y, -0.6% was forecast (prior +7.3%). This saw a slightly better than expected trade position, with the deficit at
-¥432.4bn, versus -¥600bn expected, while the March deficit printed at -¥755.1bn. We are back to March 2022 levels in terms of the deficit. In adjusted terms the trade deficit beat was more modest but still showing an improved trend.

• The decline in imports was the first y/y decline in more than 2 years. Weaker commodity prices are helping lower the import bill, while the Citi JPY terms of trade proxy is back to mid 2021 levels.
• Export growth is also back to early 2021 levels, but remains positive in y/y terms. By country, export growth to China is weaker (-2.9% y/y) compared with trends to the US (10.5% y/y) and the EU (11.7% y/y) at least in nominal terms.