MNI POLICY: BOJ Real Export Index Dn 1.7% in Q1; Weaker in Q2

By Hiroshi Inoue

     TOKYO (MNI) - Japan's real export index fell 1.7% q/q in Q1 for a second

straight drop following a 2.1% decline in Q4 and the Bank of Japan sees the

index weaker again in Q2.

     The BOJ's own real export index, calculated based on the Ministry of

Finance trade data, fell 3.4% m/m in March after a downwardly revised 2.1% gain

in February and a  4.6% fall in January.

     BOJ officials expect Japan's exports in Q2 to weaken considerably, with

global trade sharply lower on slumping demand as coronavirus lockdowns bite.

     Many factories in China have resumed operations, but imports will remain

low as capacity utilization is at low levels on weak demand, the BOJ views.

However, China's economy has shown signs of recovering after its temporary big

contraction in Q1.

     Against that, advanced economies including the U.S., Japan and Europe, are

set to contract sharply this quarter.

     --JPY4.9 BLN SURPLUS

     Exports fell for a 16th straight month in March, down 11.7% y/y, extending

February's 1.0% fall and the largest fall since July 2016 when exports fell

14.0%. Imports fell 5.0%, recording a 11th straight decline following the 13.9%

fall in February. Overall, Japan saw a trade surplus of JPY4.9 billion,

following a surplus of JPY1,108.8 trillion.

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

goods, although demand for capital goods remained weak, while demand for auto

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

     Japan's exports to the U.S. fell 16.5% y/y in March, for an eighth straight

drop and the largest decline since April 2011.

     --WEAK AUTO, MACHINER SHIPMENTS

     Exports of semiconductors rose 6.3% y/y, up for a fifth straight month

following a 23.2% gain in February. Auto exports fell 13.1% following a 4.0%

fall in February, while auto part exports fell 17.9% vs a 3.6% decline

previously.

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

Japanese auto exports, fell 23.7% in March, worsening from a 9.2% fall in

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

exports, fell 21.0% in March, also worsening from a 13.8% fall in February.

     Machinery shipments continued falling in March, down 17.9% after falling

8.8% in February, indicating overseas firms remained cautious about implementing

capital investment.

     Overall exports to China, Japan's largest trading partner, fell 8.7% y/y in

March, worsening from a 0.4% y/y fall in February, while imports fell 4.5%,

improving from -47.1%.

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

assessment of exports, saying, "Exports declined." The previous assessment was

"Exports have continued to show some weakness."

--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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