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MNI POLICY: BOJ Q2 Real Export Index Dn 18.4%; Q3 Seen Rising

MNI (London)
By Hiroshi Inoue
     TOKYO (MNI) - Bank of Japan officials expect the real export index to
gradually improve through Q3 after falling 18.4% q/q in Q2, MNI understands. The
sharp decline in the latest three month period was the third consecutive month
of decline. 
     Bank officials see exports of autos and IT-related goods picking up
gradually in the coming three months, but they expect exports of capital goods
to remain weak, restricting a sharp recovery of overall exports.
     The BOJ said last week that it is likely that exports will be at low levels
for the time being, but will pick-up as the impact of Covid-19 wanes worldwide.
     The June real export index, as BOJ economists expected, rose 1.6% m/m, the
first rise in four months. The pick up was expected, as economic activities
restarted in the U.S. and Europe.
     --EXPORTS REMAIN WEAK
     Japan's exports fell 26.2% year-on-year in June, for the 19th straight drop
following -28.3% in May, which was the biggest drop since September 2009 when it
fell 30.6%. Imports fell 14.4% year-on-year in June, for the 14th straight drop
following -26.2% in May.
     Overall, Japan's trade deficit was JPY268.6 billion in June after a deficit
of JPY838.2 billion in May.
     --WEAK AUTO, CAPITAL GOODS
     Exports of automobiles fell 49.9% y/y in June following -64.1% in May,
with their goods down 52.3% in June vs. -57.2% . Shipments of automobiles to the
U.S., which account for about 40% of the total, plunged 63.3% in June following
a 78.9% fall in May. EU exports fell 26.2% after a 47.6% fall in May.
     Machinery shipments fell again in June, down 24.5% after also falling 23.2%
in May, indicating overseas firms remained cautious on capital investment.
     Capital goods exports are likely to remain on their downtrend for a while,
mainly for machine tools for automobile-related goods and construction machines
for the resources industry, the BOJ views.
Semiconductors exports fell 7.8% y/y in June, for the second straight drop
following -1.5% in May. Chip-making equipment exports fell 6.6% in June,
reversing a 12.4% rise in May.
     China's economy is recovering but its impact on Japan's exports are
limited, with overall exports to China, Japan's largest trading partner,
down 0.2% y/y following -1.9% in May. Exports of automobiles to China rose 18.8%
in June, improving from a 20.8% fall in May.
     Exports to the U.S. fell 46.6% y/y in June, a 11th straight drop,
narrowing from a 50.6% fall in May.
--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
[TOPICS: MMJBJ$,M$A$$$,M$J$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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