December data falls short of market expectations
Japan closed out 2025 with slower-than-expected export growth, signaling renewed pressure on external demand despite a temporary recovery late in the year.
Official figures showed exports rising 5.1% year on year in December, undershooting forecasts that had pointed to a steadier pace following November’s performance.
U.S. demand retreats as regional trade holds firm
Shipments to the United States recorded a sharp reversal, falling 11.1% after a brief rebound the previous month. The setback highlights the fragility of demand from Japan’s second-largest export destination amid ongoing trade uncertainty.
By contrast, exports to Asia provided support. Deliveries to mainland China increased moderately, while Hong Kong saw a strong surge. Broader regional exports also posted solid growth, partially offsetting weakness in U.S. shipments.
Imports accelerate while annual export growth cools
Japan’s imports picked up pace in December, rising 5.1% compared with a modest increase a month earlier and exceeding market expectations.
Across the full year, exports expanded 3.1%, a noticeable slowdown from 2024. Declines in shipments to the United States and China weighed on overall performance, while gains in Hong Kong and Taiwan helped cushion the impact.
Outlook challenged by trade and political risks
Analysts attribute last year’s export resilience to advance shipping ahead of tariff changes, strong demand linked to artificial intelligence-related equipment, and the continued weakness of the yen.
Looking ahead, higher trade barriers, intensified global competition and rising geopolitical tensions are expected to weigh on industrial output. Snap elections scheduled for early February add another layer of uncertainty, with fiscal policy and currency strategy likely to remain central themes for markets.
