Japan’s trade balance likely remained in surplus in March

Japan’s trade balance is expected to show an improvement in March 2016. The country is likely to post a trade surplus of JPY798bn last month, as compared with surplus of JPY223bn in March 2015, according to Societe Generale. Japan’s trade balance, on a seasonally-adjusted basis, is expected to have reached + JPY497bn in March, continuing to be in surplus for the fifth straight month, noted Societe Generale. A significant drop in oil prices and a cyclical rebound in exports have helped trade balance be in surplus. Japan had posted a deficit in trade balance since 2011 after the earthquake disaster.

Oil prices have recovered slowly after declining sharply. Hence Japan’s energy costs are expected to remain suppressed. Economies of developed nations are rebounding, while economies of developing nations are likely to come out of their slowing phase ultimately. Therefore, exports are likely to rebound. Japan’s trade balance is thus expected to continue being in small surplus, added Societe Generale.

“We expect export growth to slow down further to -8.2% yoy in March from -4.0% yoy in February”, said Societe Generale.

Export is likely to have bottomed out. Japan’s real exports to major destinations such as China, North America and Europe are expected to have bottomed out, but real exports to developing nations continue to be weak.