MNI POLICY: BOJ Export Index Dn 14.2% M/M in Apr; May Weaker

By Hiroshi Inoue

     TOKYO (MNI) - Japan's real export index fell 14.2% m/m in April, a second

straight decline following a 3.5% fall (revised from -3.4%) in March. The April

index fell 15.6% compared with the January-March period and Bank of Japan

officials see the index in May to be weaker than this month.

     Bank officials expect Japan's exports to remain weak for the time being as

global economy struggles under the spread of Covid-19, expected to be sharply

lower across Q2, although exports to China are expected to stabilize and then

start picking up moderately.

     However, exports to the U.S. and Europe are projected to be under further

downward pressure, largely due to weaker auto sales and the latest trade data

continued to show weak exports of auto-related goods and capital goods.

     The BOJ at an extraordinary policy-setting meeting on March 16 lowered its

assessment to say "Exports declined." The previous assessment noted

"Exports have continued to show some weakness."

     --LARGE TRADE DEFICIT 

     Exports fell for a 17th straight month in April, down 21.9% y/y, widening

from March's 11.7% fall. It was the largest drop since October 2009 when exports

fell 23.2%. Imports fell 7.2%, recording a 12th straight decline following the

5.0% drop in March. Overall, Japan's trade deficit was JPY930.4 billion after a

surplus of JPY5.408 billion.

     Latest data showed a continued pick-up in global demand for IT-related

goods, although demand for capital goods was sluggish and demand for auto

and auto parts remained weak in the U.S. and Europe.

     --SOLID SEMICONDUCTOR DEMAND

     Overall exports to China, Japan's largest trading partner, fell 4.1% y/y in

April, improving from a 8.7% y/y fall in March, while imports rose 11.7%, a

first rise in nine months following -4.5% in March.

     Exports of semiconductors to China rose 29.4% in April, widening from a

14.5% rise in March, while exports of automobiles fell 10.0%, reversing from a

19.2% rise last month.

     Exports of semiconductors rose 4.3% y/y in April, up for a sixth straight

month

following a 6.3% gain in March. But auto exports fell 50.6% following a 13.1%

fall . Auto part exports fell 39.2% vs a 17.9% decline previously.

     Shipments of automobiles to the U.S., which account for about 40% of total

Japanese auto exports, plunged 65.8% in April, worsening from a 23.7% fall in

March. Those to the European Union, with a 12% share of total Japanese auto

exports, fell 55.8% in April, also worsening from a 21.0% fall in March.

     Machinery shipments continued falling in April, down 23.4% after falling

17.9% in March, indicating overseas firms remained cautious about implementing

capital investment.

     Japan's exports to the U.S. fell 37.8% y/y in April, for an ninth straight

drop and  sharply widening from -16.5% in March, for the biggest drop since July

2009.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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