Key Points
- Japan’s exports rose for the fourth straight month in December, up 5.1% year-on-year.
- A drop in shipments to the U.S. was offset by strong demand from China and a weaker yen.
- The Bank of Japan raised its interest rate to a 30-year high in December.
- Japan’s imports also grew faster than expected, resulting in a smaller trade surplus.
Japan’s export machine kept humming in December, with sales rising for the fourth consecutive month. The latest government data showed that a drop in shipments to the United States was more than offset by strong demand from other parts of the world, particularly China. A weaker yen also helped to boost the value of Japanese goods sold abroad.
Total exports grew by 5.1% in December compared to the same month last year. While this was slightly below economists’ predictions, it still points to a healthy and resilient export sector. Exports to the U.S. fell by 11.1%, while shipments to China rose by a solid 5.6%.
The impact of U.S. tariffs on the Japanese economy has been milder than many feared. This, combined with a strong U.S. economy and a new trade agreement with Washington, has given the Japanese government the confidence to raise its economic growth forecast for the year.
The positive export performance has also given the Bank of Japan more room to maneuver. In December, the central bank raised its key interest rate to a 30-year high of 0.75%. With the recent yen depreciation and the prospect of solid wage growth, the bank is expected to signal it’s ready to raise rates further to keep inflation in check.
On the downside, Japan’s imports also grew faster than expected in December, which resulted in a smaller-than-forecast trade surplus of 105.7 billion yen. Still, the overall picture is of a Japanese economy holding up well amid global trade tensions.
