Japan: December data confirms upward trend in Japanese exports
Latest reading: Yen-denominated merchandise exports rose 2.8% year on year in December. The print was down from November’s 3.8% rise and was the second-worst in 2024. That said, the print beat market expectations for the third consecutive month. Moreover, it was distorted by the year-on-year base of comparison, as exports surged in December 2023. In seasonally and inflation-adjusted month-on-month terms, Japanese exports soared by nearly double digits, as shipments to the U.S. shot up ahead of likely tariffs under President Trump.
Meanwhile, yen-denominated merchandise imports rose 1.8% in December, slowing from November’s 3.8% rise.
Overall, the yen-denominated merchandise trade balance improved from the previous month, recording a JPY 0.1 trillion surplus in December, compared to a JPY 0.1 trillion deficit in November and the strongest result since June.
Outlook: Our Consensus is for net exports to rise in sequential terms for the first time in five quarters in Q4 2024 as Japanese firms seek to front-load shipments to dodge U.S. tariffs. In 2025, exports growth is forecast to roughly quadruple from 2024 as global demand for IT products—a Japanese specialty—improves. That said, the timing and size of tariff hikes under the Trump administration is a two-sided risk: In 2024, Japan recorded its fifth-largest trade surplus on record versus the U.S.
Panelist insight: Nomura’s Yuki Ito and Kyohei Morita said:
“Real goods exports rebounded strongly, rising 9.2% m-m in December (adjustments for inflation and seasonal variation by Nomura). Judging from service imports and exports through November, real exports in Oct–Dec were higher than we have forecast, but real imports were broadly in line with our forecast. External demand (net exports), the difference between the two, looks to have boosted real GDP in Oct–Dec.”