Japan is facing a persistent economic slowdown primarily due to its rapidly growing older population, geopolitical challenges, fear of global recession, and declining birth rate. The change in the demographic structure has resulted in a shrinking workforce.
Despite these challenges, the government has maintained economic growth by implementing various monetary policies, fiscal stimulus, technological advancement, etc. Let’s discuss each of them below in the section –
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Japan’s Top Export Partners in 2024
In August 2024, Japan’s exports witnessed a drastic decline of $3.3 billion compared to the previous month. This major fall in the supply of goods comes from a slowdown in global demand for key electronic products, geopolitical tensions, and the potential threat of major chokepoints in West Asia.
Surprisingly, Japan’s strong economic performance rebounded and increased by $2.3 billion as of September 2024. Here is Japan’s export to the top partners –
- In Q2 F24-25, the export value increased by $8.6 billion, compared to the previous year.
- Trade with China declined $400 million in September 2024, showing the shift in the trade.
- Japan’s overall trade with the USA and South Korea increased by $1112 and $300 million, respectively, in August 2024.
- Demand for Japanese goods Taiwan and Hong Kong show stagnant growth in September 2024.
- As per the quarterly trade value, the destination for Japanese goods is more in demand in Asia than in Europe and other regions.
| Japan’s Top Export Partners | April | May | June | July | August | Sept |
| World | 58.4 | 53 | 58.3 | 60.9 | 57.6 | 59.9 |
| USA | 11.8 | 10.9 | 12.2 | 12.2 | 11 | 12.2 |
| China | 10.3 | 10.1 | 10.3 | 10.4 | 10.3 | 9.9 |
| Korea | 3.7 | 3.3 | 3.5 | 3.8 | 4 | 4 |
| Taiwan | 3.7 | 3.5 | 3.9 | 3.9 | 3.7 | 3.7 |
| Hong Kong | 2.7 | 2.4 | 2.8 | 3 | 3.2 | 3.2 |
Japan’s Commodities Export to Asia, Europe and the USA?
As per Japan’s export data, Asia becomes the most sophisticated place for Japanese suppliers in September 2024. Over 50% of Japan’s exports go to Asian countries, driven by growing demand from China, South Korea, and Southeast Asia rather than the US and Europe.
- Transport equipment, which consists of motor vehicles, cars, buses, trucks, motorcycles, etc., is exported to the USA, Asia, and the EU with $4, $2.3, and $1.5 billion, respectively, in September 2024.
- Over half of the Japanese exports of machinery products were supplied to Asia with $5.5 billion in September 2024.
- Both manufactured goods and chemicals are less in demand in Europe and the USA but high in demand in Asia.
| Japan’s Top Export Commodities | World | EU | Asia | USA |
| Chemicals | 6.9 | 0.6 | 4.4 | 0.8 |
| Manufactured Goods | 6.7 | 0.4 | 4.4 | 0.8 |
| Machinery | 10.5 | 1 | 5.5 | 2.7 |
| Electrical Machinery | 10.3 | 0.9 | 7 | 1.6 |
| Transport Equipment | 13.6 | 1.5 | 2.3 | 4 |
Japan Trade Performance
It’s interesting to know that Japan’s import value is continuously rising, impacting the trade balance. Increased demand for energy resources, raw materials, essential goods, geopolitical challenges, and regional conflict make the import cost high. Despite the rising import cost, internationally, Japan plays a major role as a global trading hub. Maintaining this fluctuating trade balance will be key to Japan’s future trade strategy. Let’s understand the difference between export and import values –
- While trading with China, Japan faced a negative trade balance of $9 billion in Q2 of 2024, compared to Q2 of 2023.
- On the other hand, Japan enjoys a positive trade balance worth $12.8 billion in the same quarter.
- Japan’s exports to the USA and Australia in terms of value are more than the value Japan imports from them.
A comprehensive trade analysis of top export destinations and importing countries is mentioned below.
| Top Countries | Japan’s Top Import Partner | Top Countries | Japan’s Top Export Partner | ||
| Q1 | Q2 | Q1 | Q2 | ||
| China | 39.2 | 39.7 | USA | 33.6 | 35.0 |
| USA | 21.1 | 22.2 | China | 29.2 | 30.7 |
| Australia | 13.9 | 12.1 | Taiwan | 10.1 | 11.3 |
| South Korea | 7.2 | 7.4 | South Korea | 11.3 | 10.7 |
| Taiwan | 7.2 | 7.4 | Australia | 3.7 | 3.9 |
What Are the Policies Implemented by Japan to Increase the Export Market?
To support its stagnant economy, the Japanese government has implemented many policies to boost its export market share with ease of doing business to increase its global competitiveness in the international market. Here are some key steps:
Free Trade Agreement
Japan has signed various trade agreements with the world’s major economies, such as the US, EU, and countries in Asia. These allow goods to be transported between the nations with reduced tariffs, quotas, and other trade barriers.
Investment-Friendly Environment
Over the years, Japan has offered various tax incentives to encourage businesses to establish export-orientated units. Further, the country has well-implemented regulatory reforms to reduce red tape and improve intellectual property protection.
Promoting Export from Japan
To increase the exports from Japan, the government introduces the various assistance programs to support businesses and give financial assistance. Apart from these, the government has supported Japanese brands in the international market.
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These implemented policies helped the business increase its export market share despite the severe geopolitical challenges. It also enhances Japan’s position as a leader exporter of high-quality goods and services.
