Japan's trade surplus doubles in August
Reviewed By Hitoshi URABE
"Japan's trade surplus doubles in August"
Trade figures are not one of those indications that readily illustrate where the economy is heading to, such as GDP or Industrial Output. But looking carefully, they provide various clues to the state of industrial and commercial activities of an economy.
On Wednesday, the Finance Ministry released a provisional report of Trade Statistics for August. It showed the trade surplus to be more than twice that of August last year, recording 107% increase. This means for six consecutive months the trade surplus surpassed the previous year's respective figures.
The increased surplus is the result of both increase in export and decrease in import. From a very general and naive perspective, an increase in export could be viewed as a hint of active production activities and decrease in import could mean sluggish consumption.
Overall, export increased, for five consecutive months, by 6.2% over the last year's figure, and import decreased by 2.7% that showed an increase a month earlier. Exports to Europe showed 4.7% increase, and to Asia where almost a half of Japan's export is directed to increased by 17.3%. Export to North America decreased, however, by 5.0 %.
Total import decreased by 2.7%, and except a small increase from Europe by 0.3%, most of other regions showed small decreases such as from Asia 1.4% and North America 2.9%. Actually, the major cause of the overall decline of import could be readily spotted. It was the import of mineral fuel including crude oil, which comprises about 20% of total Japanese import, and most of it coming from Middle East, which decreased by 10%. Considering that the import of mineral fuel tends to fluctuate from month to month, on both the prices and the quantity, it could be said that the overall trend of import was not much different from that of a year ago.
Then it would worth looking into the exports. Motor vehicle, the largest component of Japan's export accounting for more than 20% of the total, increased by 5.5%. But when broken down to regions, while Asia showed a huge increase by 64.9% and Europe by 9.8%, export to North America dropped by 6.1%. As a note, North America imports more cars from Japan than Asia and Europe combined. Another factor was semiconductors and other electronic parts including IC's, the second largest chunk of export, comprising eight to nine percent of the total. Export of these electronic parts to Asia, the largest market, marked a surge of 31.8%, bringing the overall increase to 23.6%.
A preliminary observation may be summarized as follows. Japan's economy is definitely not booming but there is a sign of recovery as the export is increasing. However, the decrease of motor vehicle export to North America warns caution. For one thing, because North America is the largest market for exported autos, its decreasing trend by itself would be harmful for Japan. Then there is another concern, that the drop could be a sign, or even a result, of the economy in North America slowing down. If that is the case, the increase in export of electronic parts to Asia could not necessarily be considered a comforting phenomenon. Since the largest market for Asian countries exporting products that uses these parts is North America, the prospect depends largely on the economic situation there.
In any case, it seems we still cannot but keep our fingers crossed on the outcome of North America's economy.