MNI INSIGHT: Trade Data Makes BOJ More Concerned On Q1 Economy

A slower pace in exports in January has increased Bank of Japan concerns for first quarter growth and the pace of an expected second quarter rebound, MNI understands.

The BOJ’s real export index calculated based on trade data fell 1.5% M/M in January for the second straight drop. The figures were calculated by MNI based on BOJ data and confirmed. The full January real export index data is due on Tuesday.

On Thursday, figures showed Japan's exports rose 9.6% y/y in January, a slower pace than December, and imports rose 39.6% y/y, according to data from the Ministry of Finance.

As well, private consumption is weighed down by the quasi-emergency measures to combat the pandemic. An increase in machinery orders for January reported Thursday and an upbeat outlook however could prove transitory with the January-March period seen down 1.1% q/q, indicating that businesses are becoming cautious about implementing capex, MNI understands.

The baseline scenario held by bank officials is that the consumption will rebound into the second quarter, but likely at a subdued pace, see: MNI INSIGHT: BOJ Expects Stagnant Q1 GDP On Spending, Exports.