Exports rose 7.5%y/y in April to mark its fifth straight month of gains, while imports jumped 15.1%y/y in April rising for the fourth straight month from higher energy prices. Trade surplus in April was ¥481.7bil. The increase in exports was not due to the currency factor only, but also driven by strong demand, reflected by the 4.1%y/y growth in export volume. We expect exports to remain healthy going forward, supported by global growth momentum. Meanwhile, imports are also poised to improve. Supported by stimulus policies, domestic demand is envisaged to remain healthy. This positive trend is expected to see continued improvement in imports. We reiterate our 1.2% GDP growth for 2017. Besides, should the potential incoming data continue to remain favourable, we can expect a change with Bank of Japan’s tone on its current loose monetary policy.

• Exports rose 7.5%y/y in April from a 12.0%y/y gain in March to mark its fifth straight month of gains, while imports jumped 15.1%y/y in April from 15.8%y/y in March, rising for the fourth straight month from higher energy prices. Total trade surplus in April stood at ¥481.7bil compared to ¥614.0bil in March.

• The increase in exports was not due to the currency factor only, but was also driven by strong demand. Export volume growth in April rose 4.1%y/y largely coming from shipments of semiconductors and steel, benefitting from a steady external demand.

• We expect exports to remain healthy going forward, supported by global growth momentum. However, the upside to exports could be muted with the lingering concern about the US President’s pledge to adopt protectionist trade policies. Our take is that there is some breather for Japan at least for now. Though Japan registered its third straight month of trade surplus with the US, the trade surplus however fell 4.2%y/y to ¥586.7bil in April which should take some pressure off, making it tougher for the US to justify unfair trade practices.

• Meanwhile, imports are also poised to improve. Supported by stimulus policies, domestic demand is envisaged to remain healthy. This positive trend is expected to see continued improvement in imports. We reiterate our 1.2% GDP growth for 2017. Besides, should the potential incoming data continue to remain favourable, we can expect a change with Bank of Japan’s tone on its current loose monetary policy.

Source: AmInvest Research - 23 May 2017