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MNI INSIGHT: BOJ Sees Solid Exports, Watch Trade Row Impact

--BOJ: Japan June Real Export Index -0.6% M/M Vs -4.1% in May
--BOJ: Japan Apr-June Real Export Index +0.5% Vs +0.5% in Q1
--MOF: Japan June Exports +6.7% Y/Y Vs +8.1% in May  
By Hiroshi Inoue
     TOKYO (MNI) - The Bank of Japan's real export index rose 0.5% on quarter in
April-June after rising at the same pace in Q1, supporting the BOJ view that
exports have been on an uptrend, MNI understands.
     Thursday's data indicates that external demand is expected to have a
positive contribution to the gross domestic product for the April-June quarter
due out on Aug. 10.
     The GDP data is likely to show that Japan's economy is returning to a
moderate growth path in Q2 after posting the contraction in nine quarters in Q1,
hit by the severe winter weather.
     Japanese exports continued to rise in June, up 6.7% on year, on solid
global demand for chips and car parts, indicating U.S. trade disputes have not
yet had a direct impact, Ministry of Finance data released Thursday showed.
     But BOJ economists remain vigilant against the risks that global demand
will be hurt by the protectionist U.S. trade policy.
     The seasonally adjusted real export index calculated by the BOJ based on
the MOF data showed a 0.6% month-on-month drop in June, the second consecutive
decline after falling 4.1% in May.
     MOF data showed that global demand for Japanese chip-making equipment and
capital goods for capital investment overseas remained solid, the BOJ views.
     Exports of power generating machines rose 15.4% on year in June, up from
+4.9% in May, while those of semiconductors gained 9.0%, also up from +8.4% in
May. Exports of Japanese auto parts rose 8.4%, slowing from +10.4% in May.
     Shipments of automobiles to the world fell 1.0% in June after steady gains
of +7.1% in May, +15.3% in April and +5.4% in March.
     BOJ officials view that global demand for Japanese automobiles and auto
parts, chip-making equipment and capital goods will be affected by the U.S.
trade policy and they are focused on its impact on a moderate rising trend of
Japan's exports.
     The BOJ's real import index fell 7.2% on month in June for the first drop
in two months after +7.4% in May. The index fell 1.6% on quarter in Q2 after
+0.5% in Q1.
     But BOJ officials don't see it as a sign of weaker domestic demand.
     The drop in the real import index was due mainly to temporary factors, such
as slower purchases of transport equipment in June following a sharp rise in
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:

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