Japan Exports: First Half of 2021:

 https://mainichi.jp/english/articles/20210721/p2g/00m/0bu/029000c

Article:

TOKYO (Kyodo) -- Japan's exports in the first half of 2021 rose 23.2 percent from a year earlier, marking the largest year-on-year growth in 11 years, reflecting the global economic recovery from the slump caused by the coronavirus pandemic, government data showed Wednesday.

The increase was the largest on a half-year basis since the 37.9 percent jump logged in the first half of 2010 when the world economy was rebounding from the global financial crisis, according to a preliminary report by the Finance Ministry.

Exports in the January-June period expanded to 39.86 trillion yen ($363 billion), which surpassed the pre-pandemic level of 38.25 trillion yen logged in the first half of 2019, when Japan's shipments were dented by trade conflicts between Washington and Beijing.

Ideas:

Its very good that exports have rebounded in the 3rd largest economy in the world. But it must be remembered that exports is only a part of the Japanese economy and not everything that is taking place in Japan.

Of course most likely global consumer demand for Japanese cars and other products has drastically improved and or some of it might be delayed demand, meaning many consumer might have put off or just waited because of the pandemic.'

Some of the increase might also be an improvement logistics and shipping as logistics and the container shipping sector was hit hard because of the pandemic.

Article:

The outcome is partly a reflection of a 15.4 percent plummet registered in the first half of 2020, when the pandemic disturbed economic activities across the world and dampened global demand for Japan-made items such as cars.

With strong economic recovery especially in China and the United States, Japan's exports for the six months through June were boosted by a 32.8 percent jump in car shipments as well as a 38.8 percent surge in exports of auto parts.

Imports also grew 12.2 percent from the previous year to 38.87 trillion yen, the largest gain since the 15.9 percent climb in the second half of 2017, reflecting a rebound in crude oil prices and a recovery in domestic consumption.

Ideas:

Yes, we need to always be aware, despite the huge increase in imports, its only a reflection of how far down exports plunged the first half of 2020.

Cars and car parts are a big part of the mix of exports related to Japan. As are many other products.

But something to think about. While China and the US are Japan's biggest trade partners, Japan always needs to be aware that they should always strive, as much as possible for balanced mix of trade partners.

As was seen with the trade and political conflict between the US and China, trade has the potential to be very volatile, meaning can easily go up and can easily go down. 

Yes trade with the US and China is very good, but no country, as much as possible, should depend on just a few countries for the bulk of their exports.

As much as possible a country's trade should be balanced and not just depending on the US and China only as you never know what is going to happen.

The improvement in imports and be attributed to several possible ideas, consumer demand in Japan, maybe for some foreign products has improved, an improvement in logistics and shipping, both container ships and air cargo, and changes in oil supplies which affect oil prices as oil prices are very volatile, meaning they can change quite often, which can have an affect on the overall value of imports.

Article:

Both exports and imports saw their first expansions since the latter half of 2018.

As a result, the world's third-largest economy registered a goods trade surplus of 984.99 billion yen in the six-month period, the second straight half-year period of black ink.

For June alone, Japan's exports rose 48.6 percent from a year earlier to 7.22 trillion yen, and imports were up 32.7 percent to 6.84 trillion yen. The balance marked a surplus of 383.18 billion yen, following the previous month's 189.36 billion yen deficit.

"Exports and imports sharply decreased a year ago due to the coronavirus pandemic, leading to these high growth rates for both the half-yearly and monthly figures," a ministry official told reporters.

Ideas:

Yes, its important to remember, while the increases in 2021 are very good, they are based on just how bad they were in the spring of 2020. 

At the same time, it should be remembered, the pandemic is still going on and the potential for disruptions in supply chains are still possible.

And also at the same time, improved global demand should not be taken as a given or that it automatically is going to happen. As the pandemic seems to get worse during the summer, changes in global demand might still be possible, that that it could decrease.

So while Japan is doing very good at this time, it doesn't mean, because of the continued pandemic an increase in exports is a given.

And of course, as of this writing there are always challenges with shortages of semi conductor chips for cars and the possibility of manufacturers either limiting production or even shutting down production because of the shortage, which as the potential to reduce exports and or even domestic sales.

Article:

By country, exports in the first half to China grew 27.0 percent to 8.60 trillion yen, hitting the highest level on record since comparable data became available in January-June 1979, boosted by brisk shipments of items such as semiconductor producing equipment and plastics.

Imports from the world's second-largest economy rose 14.5 percent to 9.72 trillion yen, led by strong demand for cellphones and laptops, with Japan seeing a trade deficit of 1.11 trillion yen.

In trade with the United States, exports increased 23.9 percent to 7.06 trillion yen as shipments of automobiles and car parts leaped 38.3 percent and 42.8 percent, respectively. Imports were up 7.6 percent, resulting in a surplus for Japan of 2.81 trillion yen.

Ideas:

Again its very good that exports to China and the US have rebounded nicely, but again, Japan, as much as possible should try to balance its exports so that it doesn't just rely on China and the US.

Of course China and the US, as Japan's two largest export trade partners, always get the bulk of the news related to increases exports, it should always be known, again, that sometimes trade can be very volatile, meaning there could be fluctuations due to the pandemic, now, and then also with changes in global demand and trade frictions related to political situations.

No country, or most countries want to see a trade deficit. A trade deficit usually means more money leaving the country, in the current account balance, than is coming into the country.

The US, for example is the exception, as it is mostly a trade deficit country and many of the leading manufacturers, around the world, want to sell their products in the US.

So the US always has a trade deficit. But then even that sometimes can turn into a political situation, unfortunately, because politicians don't understand global trade or they don't want to understand for their political gain.

But Japan, related to the US has always had a trade surplus, as more exports go to the US than imports from the US. 

There could be many reasons for it, but we can simply say consumer demand might be the biggest part of it.

For example, while the US might be making some quality cars, Japanese consumers just don't want to buy them. And that's OK. No country can sell everything it has in every other country. Consumer demand decides it for the most part.

Article:

"Restrictions on business activities have been eased gradually as vaccine rollouts were promoted particularly in major economies, which helped boost Japan's exports" in this year's first six months, said Masato Koike, an economist at the Dai-ichi Life Research Institute.

Looking forward, Koike said solid demand for chipmaking machines amid brisk digital investment across the world is likely to underpin Japan's exports but that the pace of recovery is expected to slow as their value has already topped pre-pandemic levels.

As for Japan's goods trade balance, meanwhile, Koike predicted that the surplus is highly likely to shrink, or that the balance may turn red, in line with an expected increase in imports.

"Imports have vast room to grow, since the nation's vaccination rate, which has been lagging behind other developed countries, will rise and boost domestic consumption," he said.

All figures were compiled on a customs-cleared basis.

Ideas:

Yes, the pace or growth of exports most likely will slow and not grow as much as they did in the first half of the year.

Part of that might be related to logistics, supply chains getting back to normal along with shipping, both air and container ships back to normal.

And then consumer demand, maybe was just waiting for an improvement in the pandemic situation, so now they have increased their demand but that also doesn't mean consumer demand will continue to improve or grow at the same pace as the first six months.

As for imports, there is always potential for growth as consumer demand in Japan tries to get back to normal.

But with the resurgence of the virus situation consumer demand might still be less than expected or needed in Japan.

As seen in the news, even with the increase in vaccinations, the number of virus cases continue to rise.

So in retrospect, the Japanese economy might be a long way off from consumer demand getting to where it should be.

Of course that is not going to make the Bank of Japan happy as it still strives for the elusive 2 percent increase in inflation.

Have a nice day and be safe!