Exports for Japan in May could reach the largest monthly rise in four decades, a Reuters poll suggests. This milestone is likely a reflection of a rebound following last year’s pandemic-driven fall.
Policymakers around the world have been paying close attention to the extent of underlying demand recovery. One of the key reason behind this is accelerated COVID-19 vaccinations and the effectiveness in improving economic conditions in some key economies.
Exports and output for Japan have started to show a marked recovery. Surging global demand is expected to have contributed to these two points. Furthermore, surging global demand also helped to offset the economy lacklustre conditions in Japan, especially after the recent extension of coronavirus emergency curbs in Tokyo and other major areas.
Next week, Japan will release its key data which includes machinery orders and consumer prices. The schedule for the Bank of Japan‘s policy meeting is for next week as well.
The poll from Reuters, which involved 17 economists predicts a 51.3% surge in Japan’s exports in May. The figure is in comparison to the same period from the previous year.
If Japan achieves the predicted figure, the country will record the steepest monthly rise since April 1980. Record from 1980 shows a 51.4% jump in shipments, a finance ministry official said. The annual rise in exports would be a big form of reflection on the recoil effect of the 28.3% fall in May of 2020.
Meanwhile, the forecast for imports increased to 26.6% year-on-year in May. This would consequently result in a 91.2 billion yen ($833.7 million) trade deficit. Reuters notes.
More expectations on Japan, and what’s coming from Japan in the upcoming week
The announcement for trade data by the finance ministry is set on Wednesday at 8:50 AM (2350 GMT Tuesday). Core machinery orders data, which does not include those for ships and electrical utilities, will be released on the same day as well.
According to the poll, core machinery orders in April would rise by 8.0% year-on-year. Consequently, this will note a 2.7% gain from a month prior.
Additionally, the poll expects a 0.1% rise in the core consumer price index (CPI) in May compared to the same month a year earlier. This index includes oil products. Volatile fresh food prices, however, are not included in the index. Reaching the expected figure would mark the first month of year-on-year price growth since March last year.
The result of the poll also expects the Bank of Japan to hold its policy interest rate at minus 0.1%. Moreover, expectations on the 10-year Japanese government bond yield ranges at around 0% at its policy meeting on June 17-18.
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