Japan’s trade balance is expected to have improved in June. According to a Societe Generale research report, Japan is likely to have recorded a trade surplus of JPY 560 billion, as compared with the deficit of JPY 60 billion witnessed in June 2015. Japan’s trade balance, on a seasonally-adjusted basis, is expected to be +JPY 382 billion, corresponding to an eight consecutive month surplus, said Societe Generale.
Exports in the month of June are anticipated to have dropped 11.3 percent year-on-year, similar to the drop in May, as exports are expected to have bottomed out. However, exports are not expected to recover strongly. Exports from Japan to Asia and the US are flat, whereas to the EU are rebounding, particularly automobiles. But with the market turmoil after the Brexit vote, the future continues to be uncertain, stated Societe Generale.
Meanwhile, imports are likely to have dropped 20.6 percent year-on-year, as compared with a drop of 13.8 percent in May. Energy prices have begun rebounding and the imports of energy might rise. However, that is probably being cancelled out by the yen’s recent strength.
“Combined with the fact that domestic demand remains stagnant after the last consumption tax hike in 2014, it will likely be some time before imports recover again,” added Societe Generale.
