Japan: Merchandise exports rise again in October
Latest reading: In October, the trade balance was JPY -0.2 trillion, matching the prior month’s reading and less wide than economists had expected. Over the last 12 months, the trade balance summed to JPY -3.1 trillion.
Yen-denominated exports were up 3.6% in year-on-year terms in October, coming on the back of a 4.2% rise in the prior month. October’s rise topped economist expectations, and was the second consecutive increase after four months of shrinkages. Shipments to the U.S. fell less sharply after declining over 10% for five straight months, with auto exports to the country benefitting from September’s trade agreement which cut tariffs on the sector from 27.5% to 15.0%.
Yen-denominated imports were up 0.7% in year-on-year terms in October, coming on the back of a 3.0% increase in the previous month.
Outlook: Our panel of economists expect exports of goods and services to contract again in Q4 in sequential terms, albeit at a softer pace than in Q3; U.S. tariffs will continue to weigh on outbound shipments notwithstanding the recent trade agreement.
In 2026, goods exports should stage a recovery as Japanese firms adjust to the new U.S. tariffs. Strong semiconductor demand will be another tailwind.
Panelist insight: Nomura’s Yuki Ito and Kyohei Morita said:
“After making adjustments for inflation and seasonality, we estimate that real exports were down by 4.0% m-m in October 2025 and that real imports were down by 1.9% […]. We forecast a 0.5% q-q decline in real exports (total for goods and services) and a 0.1% rise in real imports in the Oct–Dec GDP statistics. In this event, external demand (exports minus imports) would make a 0.1ppt negative q-q contribution to real GDP growth in Oct–Dec, or in other words weigh on GDP growth.”