Trade Expanding in Japan, Italy & India

Trade flows are increasing. Three large, but otherwise very diverse countries reported trade data today which show markedly rising trends in BOTH exports and imports. This development indicates widespread gains in economic activity, that is, in the demand for goods in many parts of the world.

Japan's trade surplus is larger in 2004 through March than in recent years, but this is because exports have increased considerably more than imports.

In Italy, imports are growing, while exports are uneven. More detailed data suggest that energy imports are not the source of the rise in imports; as we explained here a week ago in discussing relative inflation rates, the rise in the euro through February may have held down the euro value of dollar-priced oil imports in such places as Italy.

For exports, the uneven pattern in recent months is actually an improvement, following a declining trend from late 2000 through early last year.

In India, where we cite US dollar-denominated figures, both exports and imports have climbed sharply. Commentary from the Indian government relates that March exports were affected by changes in reporting practices that speed up the processing of shipments information. But this is only a partial explanation, as indicted by the steeply rising trend throughout the period shown in the table and chart. The behavior of both kinds of trade flows in India thus corresponds to what we believe intuitively about the Indian economy. It is being strengthened by the role of outsourcing, so imports possibly of both intermediate and consumer goods may be rising even as exports increasingly make inroads into world markets.