· The growth rate was significantly higher than December's 5.1% and also exceeded the 12% forecast by economists surveyed by Reuters.

· Meanwhile, imports fell 2.5% year over year in January, whereas Reuters had previously projected a 3% increase.

According to data released by the Japanese government on Wednesday, Japan's exports rose 16.8% year over year in January, far surpassing market expectations and recording the strongest growth since November 2022. Exports to Asia and Western Europe increased significantly during the period.

The expansion was much stronger than December's 5.1% growth and also higher than the 12% predicted by economists in the Reuters survey.

Exports from Japan to China—Japan's largest trading partner—jumped 32%, compared with 5.6% growth in December. This surge came even as the two countries were experiencing diplomatic tensions following remarks about Taiwan made by Japanese Prime Minister Sanae Takaichi.

Exports to the United States—Japan's second-largest trading partner—declined 5%, after already falling 11.1% in December.

From a regional perspective, exports to Asia increased by nearly 26%, while shipments to Western Europe rose by more than 25%, accelerating overall export growth and fully offsetting the 3.3% decline in exports to North America.

In terms of product categories, food, machinery, and electrical machinery (including semiconductors) were among the fastest-growing export sectors, expanding 31.3%, 14.3%, and 27.3% respectively.

Exports of transport equipment grew by 0.8% and accounted for more than 20% of Japan’s total exports. This category includes automobiles and auto parts, which have long been a key driver of Japanese exports, although the sector has been under pressure due to U.S. tariffs.

In financial markets, the Nikkei 225 rose 0.9%, while the TOPIX gained 1.26%. The Japanese yen strengthened slightly to 153.43 per US dollar, and the benchmark 10-year government bond yield fell by 1 basis point to 2.119%.

On the import side, January imports dropped 2.5% year over year, compared with a 3% increase forecast by Reuters, after rising 5.1% in the previous month.

After Japan’s export growth slowed to 3.1% last year, exports are expected to grow by 6.2% in 2024. Analysts believe that export growth could accelerate further this year, providing a strong start for the new year.

Japan’s economy expanded by only 0.1% year over year in the fourth quarter, largely supported by stronger private demand, while net exports reduced growth by 0.8 percentage points. For the full year, GDP grew 1.1%, again weighed down by net exports.

By mid-2025, Japan’s export volumes declined due to concerns over U.S. tariffs, but shipments rebounded toward the end of the year after a trade agreement with the United States reduced tariffs to 15%.

According to Reuters, the United States announced $36 billion worth of projects on Tuesday, including the construction of an oil export facility in Texas, an industrial diamond factory in Georgia, and a gas-fired power plant in Ohio. These projects will be financed by Japan as part of its $550 billion investment commitment in the United States.

“We’ve just launched a massive trade agreement with Japan! Japan is now officially moving forward with the first investments under its $550 billion commitment to the United States,” said U.S. President Donald Trump in a post on Truth Social.

Last week, Japan’s Economy Minister Ryosei Akazawa said in an interview with NHK that he hoped these initial projects could be finalized before a planned meeting between Takaichi and Trump.

Trump announced the meeting with Shigeru Takaichi ahead of the February 8 House of Representatives election, in which Takaichi led the ruling Liberal Democratic Party to a landslide victory.