2026-01-22
Japan's December 2025 Trade Balance: Surplus Narrows to 105.7 Billion Yen
According to the latest trade statistics released by Japan’s Ministry of Finance, Japan recorded a trade surplus of JPY 105.69 billion in December 2025, narrowing significantly from JPY 316.7 billion in the previous month and down about 12% from JPY 120.3 billion a year earlier. The figure also fell well short of the market consensus forecast of JPY 357.0 billion. While exports continued to hit a record high for December, growth momentum slowed, and a faster recovery in import demand compressed the surplus, marking a relatively rare import-driven trade structure in recent years.
Detailed Breakdown:
The contraction in the trade surplus was mainly due to import growth slightly outpacing exports, with key structural factors as follows:
Exports rose 5.1% YoY, easing from 6.1% in the previous month. Automobiles and electronics remained the main contributors, but weakening demand from the U.S. and China pointed to softer external momentum.
Imports increased 5.3% YoY, reaching an 11-month high, supported by a rebound in domestic consumption and investment driven by Tokyo’s large-scale stimulus program. The impact of the largest fiscal measures since the pandemic has begun to materialize.
Energy imports, including natural gas and crude oil, accounted for a larger share, with values rising more than 10% YoY, reflecting global oil price volatility and a weak yen (around JPY 155 per USD), which lifted overall import costs.
Export growth to the U.S. slowed, while shipments to China posted only marginal gains, underscoring the impact of rising U.S.–China trade tensions and ongoing global supply chain restructuring.
Taken together, while yen depreciation continues to support export competitiveness, it has simultaneously driven up import costs, placing structural pressure on Japan’s trade balance.
Overall, Japan’s trade surplus in December 2025 remained positive but narrowed significantly, reflecting the combined effects of moderating export growth momentum and strengthening import demand. Supported by stimulus measures under the current administration of Prime Minister Sanae Takaichi, domestic demand resilience has improved, although external uncertainties remain elevated.
In the short term (1–2 months), the trade surplus is expected to stabilize within the range of JPY 80–120 billion, with exports continuing to grow while import momentum remains firm. Continued yen depreciation could further amplify import-side pressure.
Over the medium term (within six months), the trade balance is likely to narrow below JPY 400 billion, with the risk of slipping into deficit increasing. The outlook will depend on U.S. tariff policy developments and the pace of demand recovery in China. An escalation of U.S.–China trade tensions could pose additional challenges to Japan’s export sector.
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