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A Tokyo-based trade industry organization projects that exports of products from Japan will continue to grow on a customs-clearance basis in fiscal 2014 (April 2014-March 2015) thanks to the recovery of the global economy. Meanwhile, imports to Japan will increase only minutely owing to the sluggishness of domestic demand. As for the nation’s balance of current account, the trade deficit will shrink, leading to increasing the trade surplus.
Japan Foreign Trade Council, Inc. (JFTC) recently released an outlook on Japan’s trade and current account balances for the next fiscal year. Currently, the Japanese yen is weakening, while the global economy has bottomed out. Resulting from these factors, JFTC foresees that on a value scale, exports of goods will improve 9.8% year on year to \70.18 trillion in fiscal 2013. Quantitatively, they will swell from a year earlier for the first time in three years. Imports will increase more greatly due mainly to the depreciation of the yen, surging 14.1% to \82.279 trillion. In terms of volume, they will be underpinned by last-minute demand before the scheduled hike in the consumption tax rate in April next year.
The trade council envisages that the total value of exports will climb 4.1% from a year earlier to \73.033 trillion in fiscal 2014. The volume will go up 2% owing to the recovery of the global economy, while the prices of export products will inflate 2.1% resulting from the continuing weakening of the yen. Imports will total \83.74 trillion, mounting 1.8%. Stagnation in domestic demand triggered by the rise in the consumption tax rate will make import quantity remain nearly unchanged, which will increase a very minute 0.1%. However, the depreciation of the yen will raise import prices more powerfully by 1.7%.
JFTC expects that Japan will enjoy a current-account surplus of \5.069 trillion this fiscal year, improving from the previous fiscal year, when it amounted to \4.354 trillion. An increase in the income balance will be grater than an increase in the trade deficit, leading to the abovementioned current-account surplus, which would be the first year-on-year growth in three years. The current-account surplus will increase further to \7.582 trillion next fiscal year, nearly returning to where it was in fiscal 2011, according to JFTC.
