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Explanation of "Developments in Real Exports and Real Imports"

April 2019
Bank of Japan
Research and Statistics Department

Basic Information

Compilation section: Economic Research Division, Research and Statistics Department

Frequency of compilation: monthly basis

Time of release:

Main series: the release day of the "Trade Statistics (Provisional)"

Reference series: three business days after the release

Method of release: Bank of Japan website

Commencement of data: January 1975 (January 2000 for reference series)

1. Content

(1) Purpose and Function

Real Exports and Real Imports are derived by dividing the Nominal Export and Nominal Import Values of goods, which are released in the Ministry of Finance's "Trade Statistics," by the Export and Import Price Indexes released by the Bank of Japan.

Real Exports and Imports, which are calculated by dividing the nominal value by the price index, represent movements of exports and imports in real terms by eliminating the effects of price changes.

(2) Release Data

The following series are seasonally adjusted and released on a monthly basis:

(Main series)

  • Real exports (CY 2015 = 100, since 1975)
  • Real imports (CY 2015 = 100, since 1975)

(Reference series)

  • Real trade balance (% of real GDP, since 2000)
  • Real exports by region (CY 2015 = 100, since 2000)
  • Real exports by goods (CY 2015=100, since 2000)

Data for real exports by region include figures for "United States," "EU," "China," "NIEs, ASEAN, etc.,"1 and "Other economies." Data for real exports by goods include figures for "intermediate goods," "motor vehicles and related goods,"2 "IT-related goods," 3 "capital goods,"4 and "others."

Notes:

  1. Includes other Asian countries such as India and Bangladesh.
  2. Includes motor vehicles, parts of motor vehicles, and power generating machine.
  3. Includes computers and units, telecommunication machinery, semiconductors,
    audio & visual apparatus, and medical and optical instruments.
  4. Includes metalworking machinery, construction machines, electrical power machinery, semiconductor machinery, and ships.

(3) Methodology

A. Real Exports

First, the total nominal value of exports is broken down into eight item groups, referring to the classifications in the "Trade Statistics" released by the Ministry of Finance. Next, the eight series are summed up after figures in each item group are deflated by the corresponding deflators. Then they are seasonally adjusted and indexed so that the annual averages of those figures in the year 2015 are equal to 100.

In principle, the Export Price Index (EPI), released by the Research and Statistics Department of the Bank of Japan, is used for export deflators. The Producer Price Index (PPI) excluding consumption tax is exceptionally used in some cases where there are no corresponding deflators in the EPI.

Group classifications and the corresponding deflators are shown in the following chart:

Table: Real Exports : Group classifications and the corresponding deflators are as follows
Item group Price index used as corresponding deflators
Foodstuff PPI excluding consumption tax by group: Beverages & foods
Textile yarn, fabrics EPI by group: Textiles (yen basis)
Chemicals EPI by group: Chemicals & related products (yen basis)
Metals and manufactures of metals1 EPI by group: Metals & related products (yen basis)
General purpose, production and business oriented machinery2 EPI by group: General purpose, production and business oriented machinery (yen basis)
Electrical machinery EPI by group: Electric & electronic products (yen basis)
Transport equipment EPI by group: Transportation equipment (yen basis)
Others3 EPI by group: Other primary products & manufactured goods (yen basis)

Notes:

  1. Export value of Iron and steel products, Nonferrous metals, and Manufactures of metals.
  2. Export value of Machinery, and Medical and optical instruments.
  3. The rest of item groups (calculated as residuals).

B. Real Imports

First, the total nominal value of imports is broken down into eight item groups, referring to the classifications in the "Trade Statistics" released by the Ministry of Finance. Next, the eight series are summed up after figures in each item group are deflated by the corresponding deflators. Then they are seasonally adjusted and indexed so that the annual averages of those figures in the year 2015 are equal to 100.

The Import Price Index (IPI), released by the Research and Statistics Department of the Bank of Japan, is used for import deflators.

Group classifications and the corresponding deflators are shown in the following chart:

Table : Real Imports :Group classifications and the corresponding deflators are as follows
Item group Price index used as corresponding deflators
Foodstuff IPI by group: Beverages & foods and agriculture products for food (yen basis)
Textile products1 IPI by group: Textiles (yen basis)
Mineral fuels IPI by group: Petroleum, coal & natural gas (yen basis)
Chemicals IPI by group: Chemicals & related products (yen basis)
General purpose, production and business oriented machinery2 IPI by group: General purpose, production & business oriented machinery and equipment (yen basis)
Electrical machinery IPI by group: Electric & electronic products (yen basis)
Transport equipment IPI by group: Transportation equipment (yen basis)
Others3 The weighted average of the following three indices using their weights in the IPI:
  1. (i) IPI by group: Metals & related products (yen basis)
  2. (ii) IPI by group: Lumber & wood products and forest products (yen basis)
  3. (iii) IPI by group: Other primary products & manufactured goods (yen basis)

Notes:

  1. Import value of Textile yarn, Fabrics, Clothing and accessories, and Textile fibers and their waste.
  2. Import value of Machinery, and Medical and optical instruments.
  3. The rest of item groups (calculated as residuals).

C. Real Trade Balance (% of real GDP)

Real trade balance (% of real GDP) is compiled by dividing the difference between Real Exports and Real Imports both denominated in the 2015 price by real GDP (seasonally adjusted) for the quarter that includes the month concerned, or for months where real GDP has not yet been released, by real GDP for the most recent quarter.

(4) Base Year for the Deflator

The base year for the deflator is 2015 (2015 prices).

(5) Seasonal Adjustments of Real Exports and Real Imports

The X-12-ARIMA procedure is used for seasonal adjustments. Updating the seasonal adjustments takes place every year around April, after the release of the retroactive revisions to the figures in the "Trade Statistics" for the previous calendar year. Until the next update, the seasonally-adjusted figures are calculated using expected seasonal factors. Details on the seasonal adjustment method of Real Exports and Real Imports (main series) are as follows:

  • The ARIMA parts of the model are: (112) (011) for Real Exports and (011) (011) for Real Imports.
  • The reference period used for seasonal adjustment is from January 1975 to February 2019.
  • The forecast using the ARIMA model is extended up to 48 months (backcasting is not conducted).
  • Trading days, holidays, and leap-year effects are adjusted using user-defined variables, which are based on the number of business days at customs clearance in Japan, etc.
  • Outliers are automatically detected/adjusted in estimating regARIMA models (level shifts and ramps are not adjusted).

(6) Time of Release

Real Exports and Real Imports (main series) are, in principle, released at 2:00 p.m. on the day "Trade Statistics (Provisional)" is released. Reference series are, in principle, released at 2:00 p.m., three business days after the release of "Trade Statistics (Provisional)." Please note that these release schedules are subject to change.

2. Related Materials

Details on the methodologies are available in the following research paper.