Japan: the trade balance returns to surplus after many months. Good and bad signal
The Japanese trade balance is back in surplus, and this is a positive signal with a touch of negativity, both for the global economy and for Tokyo.
Japan's trade balance unexpectedly swung to a surplus of 43.05 trillion yen in June 2023 from a deficit of 1,374.99 trillion yen in the same period a year earlier, exceeding market estimates by a gap of 46, 7 billion yen.
It was the first trade surplus after shortages in the previous 22 months, as exports rose while imports fell. Sales grew 1.5% year-on-year to 8,744.06 billion yen in June 2023, following a 0.6% increase in May, marking the 28th consecutive month of growth. Meanwhile, imports fell 12.9% to 8,701.01 trillion yen, the third month of decline and the steepest pace since September 2022. Here is the related graph
The report highlighted the mixed state of demand across the globe. Exports to the United States and Europe increased by 11.7% and 15%, respectively, while shipments to China decreased by 11%. The pace of China's economic expansion fell short of expectations in the second quarter, partly due to a slowdown in consumer spending, data showed earlier this week.
What are the positive signs? The fact that exports have grown and that logistics chains have regenerated, placing Japan still in a central position, and this can be seen from the increase in exports. The negative signals instead come from the drop in imports, which would show a domestic slowdown in China. Furthermore, the realignment of exports towards Europe and the USA and the drop in exports towards China could signal, on the one hand, that the technological sanctions against China by Washington are beginning to be felt, or that the Beijing economy it's slowing down.
The yen was on average 6.8% weaker in June than it was a year earlier, a factor inflating the value of imports that may still be physically smaller. But the devaluation has certainly helped Japanese exports, a well-known factor… Isn't it about time we too devalued a bit, at least against the dollar?
Thanks to our Telegram channel you can stay updated on the publication of new articles from Economic Scenarios.
The article Japan: the trade balance is back in surplus after many months. Good and bad signal comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/giappone-la-bilancia-commerciale-torna-in-attivo-dopo-molti-mesi-segnale-buono-e-cattivo/ on Thu, 20 Jul 2023 08:00:26 +0000.