Japan's trade outlook looks to U.S.-China deal – UOB

Alvin Liew, the senior Economist at UOB Group, assesses the recently publish trade balance figures in Japan along with their outlook.

• “Japan’s Aug trade balance recorded another month of deficit amounting to JPY136.3bn but it was smaller than the JPY250.7bn deficit recorded in Jul and the Bloomberg median estimate of –JPY365.4bn. On an adjusted basis, the deficit was JPY130.8bn (from JPY104.0bn in Jul).
• Japan’s disappointing trade outcome in Aug affirms the weak global trade picture. Despite the better than expected GDP growth in the latest 2Q 2019 quarter for Japan, the external demand weakness looks set to continue into 3Q, weighing down on Japan’s growth outlook for 2H this year. We keep our cautious outlook for Japan’s trade prospects in 2019 due to the on-going US-China trade dispute and more recently, the Japan-South Korea souring trade relations. One much welcomed silver lining for Japan is that US President Donald Trump announced on Monday (16 Sep) that his administration has reached an initial trade accord with Japan over tariffs and he intends to enter into the agreement in coming weeks”.