Will a Negative Interest Rate Help Japan's Price Stability?
Japan had a trade surplus in December
According to the Ministry of Finance, Japan recorded a trade surplus of 140.2 billion yen in December as compared to a trade deficit of 379.7 billion yen in November 2015. A rise in exports and a fall in imports helped Japan have a trade surplus in December.
Though Japan reported a trade surplus in December 2015, the total trade value fell by ~13.2% year-over-year. As a result, the iShares MSCI Japan ETF (EWJ) and the WisdomTree Japan Hedged Equity Fund (DXJ) fell 2.3% and 7.0%, respectively, from the past year as of January 28. Honda Motor (HMC), Sony Corporation (SNE), and Toyota Motor (TM) also fell 9.5%, 12.9%, and 9.9%, respectively, over the past year as of January 28.
Japan’s exports fell by 8.0% in December over the previous year
In December, Japan’s exports grew by 6.0% to 6,337.6 billion yen as compared to 5,981.4 billion yen in November 2015. However, with the global slowdown, Japan’s exports fell 8.0% year-over-year. The fall was mainly led by falls in exports from emerging economies such as South Africa, Brazil, Russia, and China. These falls were to the tune of 32.2%, 33.2%, 22.0%, and 8.3%, respectively. Also, a fall in exports was seen from the United States and the Middle East by 3.4% and 3.5%, respectively. On the other hand, a rise in demand was seen from the European Union by 3.1% over the past year.
Regarding principal commodity, the fall was mainly contributed by manufactured goods that recorded a fall of 15.6%. This was followed by a fall in the sales of machinery and electrical machinery by 11.6% and 7.9%, respectively.
Japan’s imports fell by 18.0% in December from a year ago
Japan’s imports fell by 2.6% to 6,197.3 billion yen in December as opposed to 6,361.1 billion yen in November 2015. With a fall in the import of mineral fuels by 43.3%, imports fell by 18.0% in December from a year ago. The fall in petroleum prices helped Japan keep its import bills lower. The imports from China fell 8.9% while those from the United States fell 10.1% in December.
The merchandise trade stood at 32.7% of Japan’s gross domestic product. Though Japan recorded a trade surplus in December, the overall foreign trade value fell by about 13.2% from a year ago. The fall in crude prices and the slowdown in China adversely impacted foreign trade. So, falling foreign trade and low inflation may slow down the revival of the Japanese economy. However, the extended stimulus may help the Japanese economy to attain price stability and economic growth.
You may also be interested in reading more on Japan’s Manufacturing: Solid Improvement in Operating Conditions.
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