Japan returns to trade surplus after nearly 3 years

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Japan posted its first trade surplus in almost three years after exports jumped in March in the back of strong shipments of cars and electronics, data showed on Wednesday.

March exports rose an annual 8.5 percent, in line with the forecast in a Reuters poll and compared with a revised 2.5 percent gain in February.

The value of imports tumbled 14.5 percent, hurt by lower oil prices, worse than the 12.8 percent fall estimate and following a drop of 3.6 percent in the month before.

This brought the trade surplus to 229.3 billion yen, much higher than the 50 billion yen expected.

Despite the improved performance, analysts say trade was likely a drag on growth last quarter.

"These numbers were likely distorted by the unusually late timing of Chinese New Year: imports from China plummeted by 19.6 percent y/y in March following a 39.5 percent y/y jump in February, while exports to China rebounded by 3.9 percent y/y following a 17.3 percent y/y fall in February," said Marcle Thieliant, Japan economist with Capital Economics.

"Nonetheless, net exports likely turned into a drag last quarter. According to our estimates, export volumes increased by 1.9 percent q/q last quarter, but this fell short of the 3.3 percent q/q rise in import volumes. As a result, net trade may have dragged down Q1 GDP growth by 0.2 percentage points," he added.

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