Image credit - AP file
Japan experienced a robust 10% surge in exports for December compared to the previous year, driven by a reinvigorated trade relationship with China and heightened demand for automobiles, machinery, and computer chips. The preliminary customs data, released on Wednesday, also revealed a nearly 7% decline in imports, resulting in a trade surplus of ¥62 billion ($410 million).
The depreciation of the Japanese yen has played a pivotal role in supporting export-oriented manufacturers such as Toyota, Honda, and Sony. However, the weakened currency has concurrently increased costs for essential imports like oil and gas, impacting the nation’s economy, the third-largest globally.
The reduction in oil prices proved beneficial in December, leading to an 18% YoY decline in energy imports. A substantial recovery in demand from China contributed significantly to the 10% increase in overall exports, while imports from China remained relatively flat. Additionally, a surge in tourist arrivals counted as exports in trade statistics, contributed to the positive trade balance.
Economist Gabriel Ng from Capital Economics noted that the late-year improvement “means that overall net exports should have made a significant contribution to GDP growth in the fourth quarter.” However, he cautioned that export growth is expected to be sluggish in the coming year.
Preliminary data from a factory managers’ survey, released concurrently, indicated weakness in the export manufacturing sector. The “new export orders” component fell to 46.0 on a scale up to 100, where 50 marks the boundary between expansion and contraction.
The United States, being Japan’s largest export market, witnessed a notable 20% surge in imports from Japan in December, while Japanese imports of U.S. goods decreased by 7%. Car shipments recorded a remarkable 16% increase in unit terms, totalling 1.47 million vehicles, and over 35% in dollar value. Other sectors, including power generation equipment, construction machinery, and semiconductors, also demonstrated robust growth.
For the entire year, Japan’s exports grew by 3%, reaching ¥100.9 trillion ($680 billion), while imports decreased by 7% to ¥110.2 trillion ($740 billion). The trade deficit substantially narrowed to ¥9.2 trillion ($62 billion), a significant improvement from the ¥20.3 trillion deficit in 2022.