Strong Rebound In Exports

Exports rebounded strongly in August, by 6.4% in volume, after a steep decline in the previous month (-4.8%). In particular trade with China was dynamic. The trade data are in line with other signals that global activity is picking up, in particular in OECD countries and China.

Les exportations ont fortement rebondi en août, de 6,4% en volume, après une chute importante le mois précédent (- 4,8%). En particulier, le commerce avec la Chine était dynamique. Les statistiques de commerce international sont cohérentes avec d’autres signes que l’activité mondiale est en train de redémarrer surtout dans les pays de l’OCDE et la Chine.

■ As expected, exports rebounded strongly in August, by 6.4% in volume, after a steep decline in the previous month (-4.8%). However, the rebound might be overestimated. According to the statistics, the value of exports increased by only 2.2%, indicating that export prices declined by more than 4%. Given the sharp depreciation of the yen, this is rather puzzling. In previous months, we observed that exporting firms used the weakness of the yen to improve profit margins. As a result, export prices were 13% higher in August from a year earlier. Export growth in the three months to August slowed further to only 1.2%, whereas prices were 1.7% higher. This suggests that it is too early to say that world trade has turned the corner.

■ Nevertheless, there is some reason for optimism. Looking at exports at geographic destinations, we observe a strengthening in the year-on-year growth rates to all areas, which may be partly explained by higher export prices. In particular, exports to China, which had suffered in recent months from political problems, picked up substantially to 15.8% compared with 9.5% in July. Exports to the US and the European Union also improved, albeit to a lesser extent. This is in line with other indicators that global activity is picking up. For example, the OECD composite index point to improvements in growth in most major OECD countries. However, the developments in the emerging economies are patchy, with growth returning to trend in China but weakening in Brazil and India.

■ Imports, in particular from the rest of Asia, are also picking up thanks to Japan’s robust growth. Imports for China were 16% higher from a year earlier in August. However, this is partly due to higher import prices. The overall import price index increased by 17%.

■ The trade deficit declined to almost JPY 800 billion. This improvement is likely to be temporary. The recent closure of the two remaining nuclear power stations in operation and the increase in oil prices point to a deterioration of the trade balance in the coming months. Japan’s energy bill might be alleviated if the authorities succeed in reopening some nuclear power stations without making concessions to safety rules.

BY Raymond VAN DER PUTTEN

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