21 Jan 2015
When will Japan’s trade deficit become a surplus? – Nomura
FXStreet (Barcelona) - The Research Team at Nomura believes that a trade surplus is likely in 2015 Q2 for Japan if crude oil prices remain at current levels.
Key Quotes
“We expect the fall in crude oil prices to trigger a major change in Japan’s balance of trade.”
“The long and difficult road to a trade surplus for Japan is undergoing a transformation in response to the dramatic fall in crude oil prices. Our current economic forecasts assume that Japan will maintain a small trade deficit, based on crude oil prices of $59.7/bbl at end-FY14 and $66.9/bbl at end-FY15. However, we think the deficit will eventually turn into a surplus if crude oil prices remain at their current levels.”
“In our view, the weakening of the yen since October 2014 has slowed down the rate of decline in fuel imports when evaluated on a yen-denominated basis.”
“..[] we think Japan's exports will follow an upward trend from now on, driven by the firm US economy. While there are still downside risks for European and other economies, we think that continued growth in Japanese exports will result in a switch to a trade surplus for Japan from 2015 Q2 onward if crude oil market prices remain at current levels.”
Key Quotes
“We expect the fall in crude oil prices to trigger a major change in Japan’s balance of trade.”
“The long and difficult road to a trade surplus for Japan is undergoing a transformation in response to the dramatic fall in crude oil prices. Our current economic forecasts assume that Japan will maintain a small trade deficit, based on crude oil prices of $59.7/bbl at end-FY14 and $66.9/bbl at end-FY15. However, we think the deficit will eventually turn into a surplus if crude oil prices remain at their current levels.”
“In our view, the weakening of the yen since October 2014 has slowed down the rate of decline in fuel imports when evaluated on a yen-denominated basis.”
“..[] we think Japan's exports will follow an upward trend from now on, driven by the firm US economy. While there are still downside risks for European and other economies, we think that continued growth in Japanese exports will result in a switch to a trade surplus for Japan from 2015 Q2 onward if crude oil market prices remain at current levels.”