Japan’s exports extended their recent run in December, but a sharp fall in US-bound shipments and stronger imports narrowed the trade surplus.
Summary:
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Japan exports rise for fourth straight month
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December growth misses forecasts at 5.1% y/y
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US-bound shipments fall sharply
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Imports jump, narrowing trade surplus
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BOJ remains alert to inflation risks
Japan’s exports rose for a fourth consecutive month in December, supported by a weaker yen and solid demand outside the United States, though the headline gain fell short of market expectations and masked a sharp drop in US-bound shipments.
Government data showed export values increased 5.1% year-on-year in December, easing from a 6.1% rise in November and undershooting the median forecast for a 6.1% gain. The latest figures nonetheless extend a run of monthly increases, highlighting the continued support provided by currency depreciation and resilient overseas demand.
The regional breakdown was mixed. Exports to the United States fell 11.1% y/y, reflecting softer US demand and the lagged effects of trade policy uncertainty. In contrast, shipments to China rose 5.6% y/y, helping to offset weakness elsewhere and reinforcing signs of stabilisation in regional trade flows. Officials also pointed to the weaker yen as a key factor boosting export values, improving price competitiveness for Japanese manufacturers.
Imports grew 5.3% y/y, comfortably exceeding expectations for a 3.6% rise, signalling firmer domestic demand and higher input costs. As a result, Japan recorded a trade surplus of ¥105.7 billion, significantly smaller than forecasts for a surplus of around ¥356.6 billion.
Overall export performance in recent months has been underpinned by a combination of yen depreciation, a still-firm US economy earlier in the quarter, and the September trade agreement with Washington that established a baseline 15% tariff on most goods. While US-bound exports weakened in December, the broader impact from US tariffs has so far proven milder than initially feared.
Reflecting easing trade concerns and improved momentum, the government recently revised up its economic growth forecast for the fiscal year ending in March to 1.1%, from 0.7%
