The recent sharp fall in import volumes is largely a legacy of the slump in the exchange rate in the early stages of Abenomics. We expect imports to rebound next year, so the boost from net trade to GDP growth should fade. This would hardly be a disaster though, as it would partly reflect a rebound in private consumption. For now though, the story remains one of exports hugely outperforming imports. We expect the trade surplus to climb to a fresh high in November. Meanwhile, the Bank of Japan will probably extend some of its lending programmes at its upcoming meeting, but leave its policy rates unchanged. In fact, policymakers may upgrade their assessment of the economy, which would support our view that the Bank will remain on hold for the foreseeable future.
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