Japan's Export Growth in November

By Makiko Yamazaki

TOKYO (Reuters) – Japan's exports rose faster than expected in November, benefitting from a weaker yen and solid global demand, although businesses express concerns about U.S. protectionist trade policies undermining future growth.

Total exports rose 3.8% year-on-year in November, surpassing the median market forecast of 2.8% and following a 3.1% increase in October.

The surge was driven by strong exports of chipmaking equipment to Taiwan and China, combined with the weaker yen, which boosted the overall value. However, volumes dipped 0.1%, indicating that growth in value was primarily due to the yen's weakness.

Koki Akimoto, an economist at the Daiwa Institute of Research, stated, "The results are not as great as they look." He suggested that exports are likely to remain flat, with strong demand for chipmaking equipment being countered by a moderate slowdown in the U.S. and potential risks arising from President-elect Donald Trump's trade policies.

Exports to China, Japan's largest trading partner, rose 4.1% in November compared to a year earlier, while exports to the United States fell 8%, mainly due to a decline in automobile exports.

Imports decreased 3.8% in November compared to a year earlier, in contrast to market forecasts of 1% growth. Consequently, Japan had a trade deficit of 117.6 billion yen ($766.17 million) in November, which was smaller than the anticipated deficit of 688.9 billion yen.

The outlook for exports appears increasingly uncertain. A Reuters survey indicated that nearly three-quarters of Japanese companies expect Trump’s next term to have a negative impact on their business environment. Trump has previously threatened tariffs exceeding 60% on U.S. imports of Chinese goods and 25% levies on goods from Canada and Mexico where several Japanese automakers have factories.

While uneven overseas demand could undermine Japan's export engine, the Bank of Japan anticipates a consumption-led recovery that would allow it to gradually raise interest rates from near-zero levels. The BOJ will announce its policy decision on Thursday, with sources indicating a likelihood of keeping rates steady as policymakers assess overseas risks.

($1 = 153.4900 yen)