Japan Merchandise Exports (ann. var. %)

Merchandise exports grow at weaker pace in January but beat expectations of contraction

Yen-denominated merchandise exports rose 3.5% year-on-year in January, following December’s 11.5% jump. January’s figure marked the softest growth since February 2021 but beat market expectations of a contraction. Meanwhile, merchandise imports rose 17.8% on an annual basis in January (December: +20.7% yoy), marking the weakest result since April 2021 and undershooting market expectations.

As a result, the merchandise trade balance widened from the previous month, recording a JPY 3.5 trillion deficit in January, which was a smaller deficit than the market had expected (December 2022: JPY 1.5 trillion deficit; January 2022: JPY 2.2 trillion deficit).

According to an estimate by Nomura, real exports fell 1.3% in seasonally adjusted month-on-month terms in January. This was largely driven by a contraction in exports to China amid earlier-than-normal Lunar New Year holidays.