(Bloomberg) -- Japan’s trade balance returned to surplus in February, with strength in the global economy supporting export growth even as lunar new year holidays caused a drop in sales to China.
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Key Takeaways
The continued growth in exports suggest the global recovery remains firm, and sales to China should bounce back after the decline caused by the holidays. Yet a stronger yen poses some risks to the Japanese economy by making exports less competitive and weighing on inflation by reducing the price of imports. The chances of a trade war breaking out due to U.S. President Donald Trump’s tariffs is another potential source of downside for Japan.
Economist Takeaways
- "Japan has been in an export-led recovery and I think that will continue this year," said Masaki Kuwahara, a senior economist at Nomura Securities Co. in Tokyo. "Year-on-year exports slowed quite a bit due to the lunar new year. February is a month when it’s easy for them to drop off."
Other Details
- Japan’s adjusted trade balance showed a deficit of 201.5 billion yen (forecast -90.8 billion yen).
- Exports to China, Japan’s largest trading partner, slipped 9.7 percent in February from a year earlier.
- Shipments to the U.S. rose 4.3 percent.
- Those to the EU increased 11.5 percent.
- Exports of automobiles and aircraft-related goods increased while imports of clothing from China, LNG from Australia and petroleum products from South Korea showed strength.
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(Updates with comments from economist.)