Trends in global trade...Imports $ 43.3 Fuels Exports $ 15.9 Imports $ 262.1 Industrial machinery...

Country trade view JapanTrends in global trade

ECD013 1115 CTV Japan A4Landscape_v3.indd 1ECD013 1115 CTV Japan A4Landscape_v3.indd 1 10-11-15 16:0210-11-15 16:02

Country trade view Japan · November 2015 2

Summary

• Japan is one of the biggest players in international trade. In 2014 it was the fourth-largest importer and the fourth-largest exporter. Nevertheless, with a trade (exports and imports) to GDP ratio of 31.8%, Japan’s economy is relatively closed.

• The largest import flows are fuels, office, telecom and electrical equipment, and other manufactured goods. The largest export flows are road vehicles and transport equipment, industrial machinery , and other manufactured goods.

• By country, Japan’s largest import flows come from China, the US and Saudi Arabia. Japan’s most important export destinations are the US, China and South Korea.

• If we look at the largest single-product flow on a bilateral basis, Japan’s largest import flow is office, telecom and electrical equipment from China (USD52bn). Road vehicles and transport equipment to the US is the largest single-sector bilateral export flow (USD52bn).

About International Trade Research at INGING International Trade Research aims to help ING’s (inter)national clients develop their knowledge and capabilities for doing business across borders, and contribute to the public debate on internationalization. We do this by providing insights on the current and future economic trends and international trade developments worldwide.



Economic profile

Sources: ING, IMF World Economic Outlook, UNCTAD, National Statistical

Services, Rating Agencies

Japan trade profile: goods export share, 2014

2014-2015

Competitiveness rank WEF 6/140

Ease of doing business rank 34/189

Credit rating

S&P A+ (Stable outlook)

Moody’s A1 (Stable outlook)

Fitch A (Stable outlook)

Economy

Population

Other indicators

2015 2016 2017

GDP growth (Real) 0.7% 1.2% 0.5%

GDP nominal (bn, USD) 4,634 4,689 4,713

GDP per capita (USD) 32,480

Exchange rate Yen/USD e.o.p. 120.6 128.1 127.5

Inflation 0.8% 1.2% 2.3%

GDP composition by sector 2014

Agriculture 1.2%

Industry 24.5%

Services 74.3%

2014

Population (mln) 126.9

Unemployment rate 3.6%

North America21.7%

South and CentralAmerica

4.3%

Africa1.5%

EU7.8%

CIS1.6%

Asia58.5%

Oceania2.7%

Agriculture & raw materialsExports $ 4.2Imports $ 12.4

Basic foodExports $ 4.1 Imports $ 62.0

Beverages & tobaccoExports $ 0.6Imports $ 6.9

Office, telecom & electrical equipmentExports $ 114.8Imports $ 124.5

ChemicalsExports $ 68.9Imports $ 43.3

FuelsExports $ 15.9Imports $ 262.1

Industrial machineryExports $ 126.0Imports $ 41.2

Ores & metalsExports $ 18.5Imports $ 58.3

Other manufactured goodsExports $ 118.4Imports $ 109.2

Other productsExports $ 4.7Imports $ 1.6

PharmaceuticalsExports $ 3.3Imports $ 20.9

Road vehicles & transport equipmentExports $ 159.8Imports $ 28.9

TextilesExports $ 8.7Imports $ 40.7

Exports (USD bn) 683.8Imports (USD bn) 822.3 Trade balance (USD bn) -138.5Exports (% of GDP) 14.9%

Product group amounts in USD bn, and for the 32 partner countries distinguished

Sources: ING, IMF World Economic Outlook, UNCTAD, national sources



United States

South America

MENA

Eurozone

Central and Eastern Europe

Commonwealth ofIndependent States

Developing Asia

Other advancedeconomies

0.91.8 1.6

2014 2015 2016

2.4 2.52.5

2014 2015 2016

2.7 2.63.8

2014 2015 2016

2.8 2.7 3.1

2014 2015 2016

1.3 0.51.7

2014 2015 2016

2.8 2.9 2.9

2014 2015 2016

-0.1 0.7 1.2

2014 2015 2016

Japan

1.0-2.2

1.2

2014

2015

2016

6.8 6.6 6.3

2014 2015 2016

Expected real GDP growth

Source: ING Forecasts October 2015, IMF World Economic Outlook 2015

Japan’s economy contracted slightly in 2014 (-0.1%).

Growth is expected to remain subdued in 2015 (0.7%) and grow somewhat faster in 2016 (1.2%). These figures are lower than the Eurozone average for both 2015 (1.8%) and 2016 (1.6%) and lags far behind the US (2.5% and 2.5%) and the other advanced economies (2.7% and 3.1%).



Trade forecasts

Japan’s trade is expected to show low growth rates in the coming years.

The average growth rate of exports between 2014 and 2019 is expected to be 0.8% while imports are expected to grow 0.3% annually. Because nominal imports are larger than exports, Japan’s trade deficit will remain at around 3-4% of Japanese GDP. If the recent trade agreement between 12 pacific countries (TPP) is adopted by their parliaments, then the prospect of net export growth will improve. According to the Asian Trade Center, Japan will benefit the most from the TPP after Vietnam and Malaysia.

* Compound Annual Growth Rate

Source: Oxford Economics. Totals are slightly lower than UNCTAD figures for realized years because Oxford totals are only made up of those product groups that are

part of the list of product groups specified by destination and product.

Total imports, bn USD Total exports, bn USD

Japan 2009 2014 2019f

World ranking 4 4 5

CAGR* 2014-2019 0.8%

Japan 2009 2014 2019f

World ranking 5 4 4

CAGR 2014-2018 0.3%

2019f20142009

552

812 823

2019f20142009

581647 673



Demand for products: imports by product group

Imports growing across the board.

The largest import flows are fuels (USD175bn), office, telecom and electrical equipment (USD103bn), and other manufactured goods (USD84bn). The highest growth is expected in industrial machinery (+7.5% annually), office, telecom and electrical equipment (+6.4%) and other manufactured goods (+6.1%). We do not expect an import contraction for any of the product groups in the coming years.

Source: Oxford Economics. Sector aggregates are lmited to the summation of the 33 countries for which bilateral data is available

Beverages & tobacco

Agriculture & raw materials

Other products

Pharmaceuticals

Road vehicles & transport equipment

Industrial machinery

Chemicals

Textiles

Ores & metals

Basic food

Other manufactured goods

Office, telecom & electrical equipment

Fuels175.2

103.1

84.4

52.0

38.4

38.3

33.1

31.6

23.0

15.5

11.3

8.4

4.0

219.3

140.8

113.4

67.4

49.5

46.7

44.4

45.5

30.3

19.8

14.2

11.28

4.5

2014 2019

Imports by product groups, 2014 and 2019, bn USD



Demand for products: origins of imports

The majority of Japanese imports originate from China, (USD161bn), the US (USD69bn) and Saudi Arabia (USD52bn).

In terms of product groups by country, the largest inflow is from office, telecom and electrical equipment from China (USD52bn). The second and third largest import flows are imports of fuel from Saudi Arabia (USD52bn) and the United Arab Emirates (USD39bn). The Netherlands accounts for USD4.3bn.

Source: Oxford Economics. Sector aggregates are lmited to the summation of the 33 countries of which bilateral data is available.

Top 10 largest import flows by product and country of originJapan

Import product Origin import Value, $bn, 2014 Value, $bn, 2019 Exp. ann. growth 2014-2019

Office, telecom & electrical equipment China 51.85 71.87 6.75%

Fuels Saudi Arabia 51.70 54.78 1.16%

Fuels United Arab Emirates 38.98 58.15 8.33%

Other manufactured goods China 35.27 47.91 6.32%

Textiles China 29.54 36.36 4.24%

Fuels Indonesia 17.98 22.77 4.84%

Fuels Australia 14.78 17.98 3.99%

Fuels Russian Federation 14.70 17.21 3.20%

Fuels Malaysia 13.91 19.55 7.04%

Basic food China 13.91 19.95 7.48%

Main origins of imports, 2014 and 2019, bn USD

0

50

100

150

200

250

Hong KongGermanyMalaysiaIndonesiaAustraliaRep. of KoreaUnitedArab Emirates

SaudiArabia

USAChina

2014 2019



Exports: key product groups

Japan’s exports remain stable.

The largest export product groups are road vehicles and transport equipment (USD125bn), industrial machinery (USD115bn), and other manufactured goods (USD104bn). A few moderately diverging developments are forecast within Japans exports. The biggest growers are expected to be textiles (+2.2% growth annually), chemicals (+1.7%), and industrial machinery (+1.8%), which is closing in on road vehicles & transport equipment as the largest exporting product group. Decreasing exports are expected for basic food (-4.1%), fuels (-2.8%), agriculture & raw materials (-2.3%) and beverages and tobacco (-2.3%).

Source: Oxford Economics. Sector aggregates are lmited to the summation of the 33 countries of which bilateral data is available.

Beverages & tobacco

Basic food

Pharmaceuticals

Agriculture & raw materials

Textiles

Fuels

Ores & metals

Other products

Chemicals

Office, telecom & electrical equipment

Other manufactured goods

Industrial machinery

Road vehicles & transport equipment

2014 2019

124.9

114.7

103.5

96.0

57.3

34.6

15.5

15.3

8.1

3.3

2.9

2.8

0.4

117.1

125.2

107.4

102.3

62.4

32.4

15.3

13.3

9.1

2.9

2.9

2.3

0.3

Key product groups, 2014 and 2019, bn USD



Exports: key destination markets

Japan’s biggest export destinations are the US (USD135bn), China (USD135bn) and South Korea (USD53bn).

China is expected to overtake the US as the most important destination for Japanese exports by 2019. Exports to the Netherlands are forecast to decline by 20% over the next five years. This movement, however, mostly reflects the sharp drop in the yen/dollar exchange rate as a result of the Bank of Japan’s monetary easing strategy. Road vehicles and transport equipment to the US is the largest single-sector bilateral export flow (USD52bn), the second is industrial machinery to the US (USD30bn) and the third is office, telecom and electrical equipment to China (USD27bn).

Source: Oxford Economics. Sector aggregates are lmited to the summation of the 33 countries for which bilateral data is available.

Top 10 largest export flows by product and destination countryJapan

Export product category Destination Value, $bn, 2014 Value, $bn, 2019 Exp. ann. growth 2014-2019

Road vehicles & transport equipment USA 52,411.46 50,052.90 -0.92%

Industrial machinery USA 30,075.39 31,726.80 1.07%

Office, telecom & electrical equipment China 27,485.38 33,233.42 3.87%

Industrial machinery China 27,062.09 33,378.91 4.29%

Other manufactured goods China 26,111.42 30,362.48 3.06%

Chemicals China 20,819.92 24,703.91 3.48%

Other manufactured goods USA 17,558.02 17,440.88 -0.13%

Office, telecom & electrical equipment USA 17,512.54 17,321.18 -0.22%

Road vehicles & transport equipment China 13,289.91 14,584.78 1.88%

Other manufactured goods Rep. of Korea 13,089.80 13,898.27 1.21%

Key destination markets of exports, 2014 and 2019, bn USD

0

40

80

120

160

NetherlandsAustraliaMalaysiaIndonesiaGermanySingaporeHong KongRep. of KoreaChinaUSA

2014 2019


Daniel [email protected]

James SmithEconomist+44 20 7767 [email protected]

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Trends in global trade...Imports $ 43.3 Fuels Exports $ 15.9 Imports $ 262.1 Industrial machinery...

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