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Free AccessREPEAT: MNI INSIGHT: BOJ Sees Solid Exports Despite Soft Data
By Hiroshi Inoue
TOKYO (MNI) - Bank of Japan data released Wednesday showed a drop in
December real exports but BOJ officials believe Japanese exports remain on a
gradual uptrend backed by firmer global demand, supporting the modest economic
recovery, MNI understands.
Industrialized and emerging economies are showing signs of higher growth
than predicted three months ago, the officials have judged.
--Q4 REAL EXPORTS UP
The real export index calculated by the BOJ based on the trade data
released Wednesday by the Ministry of Finance showed a 2.4% month-on-month fall
in December, the first drop in three months after +5.2% in November +2.6% in
October.
But the index for the final quarter of 2017 gained 2.4% from the previous
three months, when it rose 1.9%.
MOF data showed Japanese exports rose 9.3% on year in December, marking the
13th straight year-on-year rise. The pace of increase decelerated from +16.2% in
November while exports to Asia and China both hit record highs, backed by strong
demand for chip-making machines and steel in the region.
Exports of automobiles -- which BOJ economists are closely watching as an
indicator of sustained economic growth -- rose 5.6% on year in December, with
the pace of growth slowing from +7.7% in November.
Shipments of automobiles to the U.S., which account for about 40% of total
Japanese car exports to the world, fell 2.7% on year in December following a
3.1% rise in November.
Some private-sector economists have warned that car demand in the key U.S.
market may be losing steam, but BOJ economists think it is too early to say so
without further analysis.
Japanese exports of capital goods used for business investment in equipment
-- another key indicator closely watched by BOJ officials -- rose 13.9% on year
in December following a 22.9% gain in November.
The BOJ will release details of its real trade indexes on Monday.
BOJ economists are also paying attention to the Jan. 31 release of December
industrial production and the government outlook for factory output in January
and February, a key indicator of the near-term strength of the economy.
--HIGHER GLOBAL GROWTH
In its quarterly Outlook Report released Tuesday, the BOJ board slightly
upgraded its risk assessment of overseas economies.
The BOJ listed the same risks as before -- the U.S. economic policies,
emerging economies, Brexit negotiations and geopolitical risks -- but it also
left out the sentence that "there is uncertainty regarding developments in
overseas economies."
BOJ officials now regard global growth as firmer than three months ago,
when they last updated their medium-term projections, but going forward, it is
still uncertain whether external demand will help push up domestic inflation.
The International Monetary Fund on Monday revised up its forecast for
global growth for both 2018 and 2019 to 3.9% from 3.7% projected in October. The
IMF forecast for Japan's growth for 2018 was also revised up to 1.2% from the
0.8% made three months ago, and its forecast for 2019 was revised up slightly to
0.9% from 0.8%.
--SOLID DEMAND FOR SMARTPHONES
The MOF data showed Japanese imports rose a sharp 14.9% on year in December
for the 12th straight year-on-year gain after +17.2% in November, led by crude
oil, telecommunications equipment and refined petroleum products.
Rising energy costs are pushing up import bills but solid demand for the
iPhone X, which was released in November, has also been a driving force behind
the recent sharp increase in imports as well as a major factor supporting retail
sales.
Imports of telephones (mostly smartphones) more than doubled (+104.7%) on
year in December, accelerating from +87.6% in November.
The BOJ's real import index rose 2.7% on month in December, the third
straight gain after +3.6% in November. In the October-December quarter, the
index rose 2.6%, after falling 1.5% in July-September.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.