After difficult months, Japan’s economy is surprising with strong export numbers, giving the central bank more room to raise interest rates.
Details
🇯🇵 The turnaround: Japan’s total exports rose 6.1 percent year on year in November, clearly beating expectations. It marks the third consecutive month of growth and the strongest increase in nine months.
🇺🇸 Uncle Sam is buying again: Shipments to the United States increased by 8.8 percent, ending an eight-month slump with Japan’s second-largest trading partner. Easing US tariffs are helping.
🇨🇳 Not all markets are celebrating: Exports to China, Japan’s largest trading partner, fell 2.4 percent over the same period. Reason: geopolitical tensions around Taiwan.
🇪🇺 Europe on a buying spree: Business with Western Europe, especially the EU, surged, posting a strong increase of 19.6 percent.
💰 More income, fewer worries: With exports rising and imports coming in weaker than expected, Japan recorded a massive trade surplus of 322.3 billion yen, roughly 2.08 billion USD.
🍵 Fun fact: Matcha saves the balance sheet
Beyond cars and machinery, green tea is also setting records. Driven by the global popularity of matcha, tea exports reached their highest level in more than 70 years in the first ten months of the year, up 44%.
BoJ in focus
The central bank is now in the spotlight. The strong data, combined with the highest business confidence among large manufacturers in four years, is likely to reinforce the Bank of Japan’s normalization strategy.
Markets widely expect the BoJ to raise its policy rate from 0.5 percent to 0.75 percent as early as this week, as the impact of US tariffs has been cushioned by the weak yen.
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