Japanese exports posted a double-digit increase for the first time in more than three years in March as the recovery picked up in key markets abroad.

The value of overseas shipments gained 16.1% from a year ago, led by exports of cars, plastics and non-ferrous metals, the finance ministry reported Monday. Economists had forecast an 11.4% increase. The figures were boosted by comparison with data from 2020 when the coronavirus was slamming global trade.

Key Insights

  • Rising exports provide key support for Japan’s economy at a time when vaccination delays and an emerging fourth wave of virus infections are weighing on domestic activity.
  • The gap between foreign and domestic markets was highlighted last week in a report on machinery orders that showed local orders falling, while those from abroad surged.
  • Looking ahead, climbing U.S. retail sales and demand from China, where year-on-year growth jumped by a record last quarter, are likely to keep driving Japan’s exports. March shipments to China probably give a better sense of the trend than the previous two months, which were distorted by the timing of the Lunar New Year holidays.
  • A drop in the yen’s value gives exporters another tailwind. The currency fell roughly 4% versus the dollar last month, increasing the value of repatriated profits.

What Bloomberg Economics Says…

“A key question for Japan’s near-term outlook is whether exports will keep the recovery on track as a virus comeback depresses domestic demand. The balance of evidence suggests yes.”

—Yuki Masujima, economist