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Japan Trade January 2024

Japan: Merchandise exports beat expectations in January

Yen-denominated merchandise exports soared 11.9% year-on-year in January (December: +9.7% year-on-year), exceeding market expectations and driven by strong exports of cars and semiconductors. The figure marked the strongest increase since November 2022. However, the print was likely inflated by a low base of comparison—the Lunar New Year holidays took place in January last year as opposed to February this year. In seasonally adjusted month-on-month terms, exports declined 3.6%. Meanwhile, merchandise imports decreased 9.6% on an annual basis in January (December: -6.9% yoy) on lower imports of coal and liquefied gas.

As a result, the merchandise trade balance deteriorated from the previous month, recording a JPY 1.8 trillion deficit in January (December 2023: JPY 0.1 trillion surplus; January 2023: JPY 3.5 trillion deficit).

Despite the stronger-than-expected showing for goods exports in January, our panelists expect exports of goods and services to decline in Q1 in seasonally adjusted annualized terms. However, exports should then recover strongly from Q2 onward.

Analysts at Nomura commented:

“After adjusting for inflation and seasonality, we estimate that real exports fell by 3.8% m-m in January, turning downward after rising by 8.1% in December. January real exports were down 0.7% from the Oct–Dec 2023 average. We forecast real exports of goods and services down 1.4% q-q and real exports of goods down 0.3% in the Jan–Mar 2024 GDP statistics.”

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