① Japan's exports to the US increased 7.3% in July due to strong market demand for chip manufacturing equipment. ② Against the backdrop of the Bank of Japan's gradual withdrawal from the ultra-loose monetary policy, the yen is likely to continue to rise in the future, which will also put resistance on Japan's export growth.
AFP, August 21 (Editor Liu Rui) On Wednesday, Japan's Ministry of Finance released Japan's import and export data for July. According to the data, Japan's export growth rate in July was slightly lower than expected, while export volume continued its downward trend. This has heightened people's doubts about Japan's economic prospects, and has also caused a heavier fog on the path of the Bank of Japan's further interest rate hike.
Japan's exports fell short of expectations in July
According to data from Japan's Ministry of Finance, Japan's exports increased 10.3% year-on-year in July, the eighth consecutive month of growth, but below the median market forecast of 11.4%. Furthermore, Japan's total export shipments in July fell 5.2% compared to the same period last year, for the sixth consecutive month of decline.
The data shows that Japan's exports to the US increased 7.3% in July due to strong market demand for chip manufacturing equipment.
By category, Japan's exports of semiconductor manufacturing equipment surged 27.8% in July, exports of semiconductor electronic components surged 25.2%, and automobile exports increased 6.2% year on year.
Furthermore, Japan's imports increased 16.6% year over year in July, higher than economists' expectations of 14.9%. This left Japan's trade deficit of 621.8 billion yen (about 4.28 billion US dollars) in July, far higher than the expected deficit of 330.7 billion yen.
Are export engines facing a flameout crisis?
Recent data shows new signs of continued wage growth in Japan, which will help inflation continue to meet the expectations of the Bank of Japan's 2% target, which is the key factor behind the Bank of Japan's recent interest rate hike.
However, as Japan gradually withdraws from the ultra-loose monetary policy of the past 10 years, the Bank of Japan is still facing challenges such as “rising living costs increase pressure on households.”
In this context, the Japanese authorities definitely want to be boosted by export engines, but against the backdrop of recent weak overseas demand, the latest export data for July has weakened this hope.
Although Bank of Japan Governor Kazuo Ueda said that if economic and price trends meet its expectations, the Bank of Japan will continue to raise interest rates, the economic recovery momentum shown by Japan over the past year is still weak, and the impact of falling yen on consumption continues to increase uncertainty about the path of policy normalization.
Furthermore, the increase in Japan's exports in July was also driven by a weak yen. According to Japan's Ministry of Finance, the average exchange rate of the yen to the US dollar in July was 159.77 yen per US dollar, down 12.3% from the same period last year. However, against the backdrop of the Bank of Japan's gradual withdrawal from the ultra-loose monetary policy, the yen is likely to continue to rise in the future, which will also put resistance on Japan's export growth.