Japan’s exports still negative apart from weak yen

There’s more to the “rosy figures”.

The yen has been going downward since November last year, and its impact was seen in the strong growth of exports.

According to a report by DBS, exports registered a strong growth of 12.9% (YoY) in Dec14, the highest over 12 months. Trade deficit also narrowed to JPY 712bn (sa), below the JPY 800bn mark for the first time over 1.5 years.

DBS says that the “rosy” export figures could be partly explained by the translation effects of a weak yen. Due to the Bank of Japan’s QE expansion late last year, the yen has resumed its downward course starting from Nov14. Excluding the impact of a weaker yen, exports growth actually remained negative in the dollar terms in Dec14 (-2.0%).

Here’s more from DBS:

Further stripping out the price factors, the volume of exports still increased in Dec14 (6.0%). The rise was led by electronics components. This is in line with the pickup witnessed in Taiwan’s and Korea’s electronics exports in recent months, which to a large extent, reflects the cyclical demand in the iPhone supply chain.

On the relative basis, Japan has continued to underperform in the export sector. In the world’s three largest markets – US, EU and China, the share of Japanese exports has fallen to 5.6% in 2014, down from 5.8% in 2013 and 6.4% in 2012. Notwithstanding the yen’s sharp depreciation over the past two years, there is little evidence that the country’s trade competitiveness has been enhanced.