In a positive turn of events, Japan’s exports witnessed a remarkable surge of nearly 10% in December compared to the previous year. This substantial growth was attributed to a revival in trade with China and a robust demand for vehicles, machinery, and computer chips.
Preliminary customs data released on Wednesday revealed a notable trade surplus of 62 billion yen ($410 million) as imports experienced a nearly 7% decline. The encouraging export figures were propelled by a weakened Japanese yen, benefiting export-oriented industries like Toyota, Honda, and Sony. However, the depreciation of the yen did increase costs for importing crucial commodities such as oil and gas, vital for fueling the world’s third-largest economy.
December saw a significant 18% reduction in energy imports, thanks to a decline in oil prices. The positive trend was further bolstered by a 10% increase in exports to China, reflecting a rebound in demand from the region. Imports from China remained stable during this period.
A surge in tourist arrivals, counted as exports in trade statistics, provided an additional boost to the overall trade performance. Analysts, like Gabriel Ng of 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, cautious sentiments prevail about the future, with expectations of sluggish export growth in the coming year.
A preliminary survey of factory managers also released on Wednesday highlighted weaknesses in the export manufacturing sector, as “new export orders” dipped to 46.0 from 46.4 on a scale where 50 marks the cut-off between expansion and contraction.
Focusing on specific markets, exports to the U.S., Japan’s largest export destination, surged by an impressive 20% in December, while imports of U.S. goods witnessed a 7% decline.
Key sectors such as automotive witnessed a robust performance, with car shipments rising by 16% in unit terms and over 35% in dollar value. Other areas, including power generation equipment, construction machines, and semiconductors, also demonstrated strong growth.
Looking at the full-year picture, Japan’s exports experienced a 3% growth, reaching 100.9 trillion yen ($680 billion), while imports saw a 7% decline, totaling 110.2 trillion yen ($740 billion). The trade deficit narrowed significantly to 9.2 trillion yen ($62 billion), marking a substantial improvement from the 2022 deficit of 20.3 trillion yen.