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MNI INSIGHT: BOJ Vigilant Despite July Real Export Index Rise

TOKYO (MNI)

Bank of Japan officials remain vigilant on the outlook for automobile exports and production due to parts shortages in Southeast Asia but await data later this month after gains in real exports in July, MNI understands.

The real export index likely rose 1.7% m/m in July for the second straight gain following +0.7% (revised from +0.5) in June. The July trade data did not include the impact of lockdowns in Thailand, Malaysia and Indonesia, with the data available in or after August.

The figures were calculated by MNI based on BOJ data and confirmed. The full July real export index data is due on Aug. 23.

However, bank officials are paying attention to the impact of the closure of plants that provide automobile parts caused by the spread of coronavirus in the Southeast Asian countries on auto production, see: MNI: BOJ Worried On Exports, Output On SE Asia Covid-19 Rates.

MONITORING TRENDS

In Japan as well, a state of emergency to combat the spread of Covid-19 variants has been extended and expanded.

But the BOJ has not revised the view that exports are likely to continue increasing firmly, supported by steady expansion in digital-related demand and the recovery in capital investment, both on a global basis.

Bank officials are monitoring industry feedback on production, with a key shortage of semiconductors used in automobile manufacture slated to ease in or after the third quarter.

JULY TRADE

Japan's exports rose 37.0% y/y in July for the fifth straight increase following +48.6% in June and imports rose 28.5% y/y for the sixth straight gain following +32.7% in June, according to data released this week.

Higher automobile, auto parts and iron and steel product shipments abroad were a factor in July's export gain. But the data also showed a slower pace in overall exports and auto parts from the previous month. The base effects of the last year when both exports and imports fell (-19.2% and -22.0% in July 2020, respectively) were also behind the rise in exports and imports in July.

Japan posted an overall trade surplus of JPY441.0 billion for the second straight surplus in July following a surplus of JPY383.9 billion in June.

MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com
MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com

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