Japan January chemical exports up 11%; overall shipments at record high

Nurluqman Suratman

21-Feb-2024

SINGAPORE (ICIS)–Japan’s chemical shipments in January rose by 11.2% year on year to yen (Y) 865.9bn ($5.8bn), with overall exports hitting a record high for the month, thus, easing some concerns over Asia’s highly industrialised economy which tipped into a technical recession in the second half of 2023.

  • Automobile exports up 16% year on year
  • Shipments to the US, China post double-digit growths
  • Japan loses position to Germany as world’s third-largest economy in 2023

January exports of organic chemicals rose by 16.5% year on year to Y169.5bn, while shipments of plastic materials were up by 16.1% at Y221.3bn, preliminary data from Japan’s Ministry of Finance (MOF) showed.

By volume, exports of plastic materials were up by 10.5% at 377,957 tonnes, the ministry said in a statement.

Overall exports in January rose by 11.9% year on year to Y7.33tr, while imports declined by 9.6% at Y9.09tr, resulting in a monthly trade deficit of Y1.76tr.

Total shipments to the US, Japan’s largest export market in January, rose by 15.6% year on year, while those to China were up by 29.2%.

The increase in overall exports last month was supported by the 16.1% year on year in increase in motor vehicles to Y1.18tr. Japan is the world’s biggest car exporter.

EXPORTS FUEL RECOVERY HOPES
The robust exports data for January could provide a potential buffer against any further contraction of the economy, which shrank at an annualized pace of 0.4% in the last three months of 2023.

The economy was in technical recession after contracting for a second consecutive quarter from the 3.3% fall recorded in July-September 2023, amid sustained weakness in private consumption and business spending.

Private spending, the largest component of Japan’s GDP, declined by 0.2% quarter on quarter in October-December 2023, marking its third straight quarter of decline.

“Rising inflation continues to weigh on consumer spending,” banking group Citi said in a note.

“However, the Bank of Japan does not appear to be too concerned about the recent weakness of private consumption, saying that strong wage hikes this spring would likely improve the household income environment going forward.”

On a year-on-year basis, Japan posted a Q4 GDP growth of 1.0% year on year, markedly slower than the growth seen in the previous two preceding quarters.

In real terms, the size of the economy shrank slightly to Y557.3tr in Q4 2023 but was higher than pre-pandemic peak of Y556.3tr in Q2 2019, Singapore-based UOB Global Economics & Markets Research said in a note.

“However, in [US] dollar terms, with the significant weakening of the yen, Japan lost its position as the third largest economy, being overtaken by Germany,” it said.

In 2023, the Japanese yen slumped by around 11% in value against the US dollar, posting the biggest decline among other major currencies, as the Bank of Japan maintained its key interest rate at -0.1%, while others, led by the US, had had aggressively increased rates in a bid to temper inflation.

A weaker currency, however, is a boon for exports.

At 04:38 GMT, the yen was trading at Y149.96 against the US dollar, after weakening past Y150 on 13 February for the first time since November last year.

The yen had weakened to an all-time low of Y151.655 against the greenback on 14 November 2023.

Focus article by Nurluqman Suratman

Thumbnail image: Japan’s 10,000-yen notes and US’ $10 notes – 6 June 2016 (Franck Robichon/EPA/Shutterstock)

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