Japan's Real GDP Narrowly Turns Positive to 0.1%; Dual Weakness in Domestic and External Demand Casts Shadows over 2026 Recovery

Japan's December Trade Surplus Skyrockets to 1.15 Trillion Yen, Hitting a Recent High for the Month

Core Overview: Major Trade Balance Surprise, Surplus Breaks the Trillion Yen Mark Data released by Japan's Ministry of Finance reveals that the Trade Balance for December 2025 recorded a surplus of 1.1526 trillion yen. This not only represents a multiplicative jump from November's 105.7 billion yen but also forms a stark contrast to the massive deficit of 2.76 trillion yen in the same period in 2024. This figure is far superior to the slight surplus generally expected by the market, marking a structural turning point in Japan's trade structure at year-end, with the single-month surplus scale hitting a new high for the same month in recent years. Key Details: Tech Exports Show Strength, Energy Burden Lightens The stellar performance of this month's data was primarily driven by two main pillars. First, export momentum for semiconductor manufacturing equipment and electronic components was strong; benefiting from the continued expansion of global AI and data center construction demand, related high-value-added products offset some of the weakness in traditional consumer electronics. Second, automobile exports remained resilient in US and European markets, coupled with a relatively stable yen exchange rate, supporting total export value. On the import side, as multiple nuclear power plants (such as units at the Kashiwazaki-Kariwa Nuclear Power Plant) restarted operations, Japan's dependence on expensive Liquefied Natural Gas (LNG) decreased, significantly lowering the winter energy import bill and becoming a key driver in turning the deficit into a surplus. Deep Attribution: Structural Improvements and Cyclical Tailwinds Coexist Market analysis points out that this expansion of the surplus is not merely due to seasonal factors. According to views from the Institute of Energy Economics, Japan (IEEJ) and related institutions, the implementation of the nuclear restart policy is gradually repairing Japan's long-standing structural trade deficit problem. Meanwhile, analysts from institutions such as Nomura Securities and FocusEconomics also mentioned that despite global economic uncertainties, Japanese companies have seen a recovery in export competitiveness to the US and Europe following supply chain restructuring. This, combined with a wave of global semiconductor inventory replenishment at the end of 2025, jointly contributed to this "better-than-expected" trade performance. Outlook and Risks: Short-term Focus on Lunar New Year Effect, Medium-term Watch on Global Slowdown Short-term (1-2 months): Looking ahead to early 2026, as January and February coincide with the Lunar New Year holidays, supply chain activity in the Asian region typically slows down. This may lead to a seasonal pullback in January export data, and the trade surplus may narrow. Medium-term (3-6 months): As the new US administration's trade policies (such as potential tariff risks) become clearer, and depending on whether the global manufacturing PMI can continue to expand, these will be key to whether Japan's exports can maintain a "trillion yen surplus" norm. If global demand slows, export momentum may weaken, but with energy import costs under control, the probability of the trade balance deteriorating to last year's levels is relatively low. Web Search References https://www.japantimes.co.jp https://www.ieej.or.jp https://tradingeconomics.com