Japan’s Exports Jump Most Since 2017 Amid Global Trade Recovery

Japanese exports posted a double-digit gain for the first time in more than three years in March, offering another indication that a recovery in global trade is gaining strength.

The value of overseas shipments jumped 16.1% from a year ago, for the biggest increase since November 2017, led by exports of cars, plastics, semi-conductors and chip-making equipment, the finance ministry reported Monday. Economists had forecast a rise of 11.4%. Exports to China surged by more than a third.

While the stronger-than-expected figures were boosted by comparison with data from 2020 when the coronavirus was slamming global trade, the value of exports was also the highest in three years, indicating solid improvement. Month-on-month, exports rose 4.3% after seasonal adjustment.

Japan’s Exports Jump Most Since 2017 Amid Global Trade Recovery

Key Insights

  • “China’s economy has completely normalized, so it’s true that exports to China are doing well,” said economist Yuichi Kodama at Meiji Yasuda Research Institute. “The same goes for the U.S. The Biden administration’s fiscal package has meant that personal consumption has been rising steadily, so I expect exports to also keep doing well next month and onwards.”
  • Rising exports provide key support for Japan’s economy at a time when vaccination delays and an emerging fourth wave of virus infections are weighing on domestic activity, with speculation of a renewed state of emergency in Tokyo gaining traction.
  • The March jump helps lift exports gains to 6% for the first quarter, compared with a year earlier. Quarterly imports were up 1.9%. Economists flagged the difficulty of capturing the true strength of the trend with year-on-year figures.
  • Looking ahead, climbing U.S. retail sales and demand from China, where on-year growth jumped by a record last quarter, are likely to keep driving Japan’s exports.
  • A drop in the yen’s value gives exporters another tailwind. The currency fell roughly 4% versus the dollar last month, increasing the value of repatriated profits.

What Bloomberg Economics Says...

“Japan’s record exports to Asia in March show external demand broadening beyond China and providing firmer support for the economy...The data reinforce our view that exports will play a key role in sustaining the recovery as another virus wave hits the country.”

--Yuki Masujima, economist

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  • Imports rose 5.7% from the previous year, compared with a 4.7% increase forecast by analysts.
  • Exports to China surged 37.2% from a year earlier, with chip-related gear and automobiles among the largest gainers. Shipments to the U.S. rose 4.9%. Exports to the EU gained 12.8%, the largest increase in nearly three years.
  • The trade balance was 663.7 billion yen in the black. Analysts had expected a 493.2 billion yen surplus.

©2021 Bloomberg L.P.

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