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Japan merchandise trade surplus widens yet misses expectations

Thu, Oct 22 2009, 01:23 GMT
by ecPulse.com analysis team

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Despite a widening merchandise trade surplus in Japan, it still was less than median expectations yet it's safe to say that exports and imports significantly picked up due to domestic and global stimulus plans that helped boost global demand during the first quarter which was seen as the bottom for the Japanese recession.

Total Merchandise trade balance surplus for the month of September widened to 520.6 billion yen from a previous revised reading to 183.3 billion from 185.7 billion. However, the reading was still worst than estimates of a surplus of 620.8 billion yen.

The annual merchandise exports for the month of September came in at 5,104.7 billion yen, or -30.7% which is higher than the previous value of 4,540.1 billion yen, or -36.0%, yet worse than analyst expectations of- 29.7%. Annual imports of goods for the month were 4,584.1, billion or -36.9%, showing improvement from the previous 4,327.1 billion or -41.3%.

As for the adjusted merchandise trade balance, the surplus during the month reached 58.6 billion as it narrowed from 173.5 billion that was revised from an originally reported 225.4 billion yen.

The adjusted exports were 4,351.4 billion yen falling 0.8%, marking the third consecutive drop, as it was less than the previous 4,385.7 billion when they declined 0.2%. On the other hand, seasonally adjusted imports were reported at 4,393.8 billion yen or 1.9%, inclining from the previous 4,212.2 billion or 0.5%. Imports were up for the third consecutive month.

Stimulus plans in Japan worth 25 trillion yen were enough to help support imports as consumers were increasing spending. Also, the recent rally in the yen in the markets was another reason for higher imports since overseas products have now become more attractive.

However, the yen's appreciation wasn't only benefiting the economy, it was also damaging it. The yen gained 10% versus the greenback during the past ten months which eventually took a toll on corporate earnings as their exports were hit by waning global demand.

Global stimulus plans that have reached 2.2 trillion dollars were set to help pick up demand yet the most significant was the 4 trillion yuan stimulus in China that aided Japanese exports making China this year the largest importer of Japanese goods and services, overcoming the US as Japan's major trading partner.

It is also worth mentioning that exports in Japan were up 6.8% during the second quarter of the current year after it had significantly slumped due to the financial crisis. Exports were responsible for more than half of the annual GDP reading when the economy expanded 2.3% following a 11.7% contraction in the first quarter. Expectations show that ease in the drop in exports will help the economy grow during the third quarter since exports are the major backbone of the economy. The recovery of global demand from the worts financial crisis since the Great Depression was evident in several sectors especially the industrial sector as it showed signs of improvements for the sixth consecutive month.

Published on  Thu, Oct 22 2009, 01:24 GMT