Japan's Trade Deficit Shrinks Sharply in 2024

Tokyo - Japan's trade deficit shrank significantly in 2024 to ¥5.33 trillion ($35.4 billion), a 44% decrease from the previous year's ¥9.52 trillion, according to preliminary data released by the Ministry of Finance on Wednesday. This marks the fourth consecutive year of trade deficit, but the gap narrowed considerably.

The decrease in the deficit was primarily driven by a surge in exports, which reached a record high of ¥107.9 trillion, up 6.2% from the previous year. This is the highest figure since comparable data became available in 1979, marking the fourth consecutive year of growth and the second consecutive year exceeding ¥100 trillion. Exports were particularly strong for semiconductor manufacturing equipment, largely destined for China, which saw a significant increase of 27.2%. Exports of automobiles, primarily hybrid vehicles to the United States, also rose by 3.7%.

The yen's weakness against the US dollar played a significant role in boosting export values. The average exchange rate for 2024 was ¥150.97 against the dollar, a depreciation of over ¥10 compared to the previous year's ¥140.17. This depreciation contributed to a rise in import value despite a 2.5% decline in import volume.

Total imports for 2024 rose by 1.8% to ¥112.4 trillion, marking the first increase in two years. Imports of computers, mainly from the United States, saw a considerable increase of 31.7%, while nonferrous metal ores, such as copper from Chile, rose by 14.7%. Conversely, imports of energy-related products declined due to falling prices. Coal imports, largely from Australia, decreased by 22.9%, and crude oil imports, primarily from Saudi Arabia, fell by 4.4%.

In December 2024, Japan recorded a trade surplus of ¥130.9 billion, marking the sixth consecutive month of surplus. Exports for December rose by 2.8% year-on-year to ¥9.91 trillion, while imports increased by 1.8% to ¥9.78 trillion.

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