FX.co ★ Japan Trade Deficit Narrows Sharply

Japan’s trade deficit narrowed sharply to JPY 1,152.7 billion in January 2026 from JPY 2,741.7 billion a year earlier, outperforming market expectations of a JPY 2,142.1 billion gap, as exports rose strongly while imports declined. On a year-on-year basis, exports surged 16.8% to JPY 9,187.5 billion, accelerating from 5.1% growth in December and marking the fastest increase since November 2022, supported by robust demand from China and other Asian economies ahead of the Lunar New Year. In contrast, imports fell 2.5% to JPY 10,340.2 billion, defying forecasts for a 3% rise and reversing the 5.2% growth recorded in December. This was the first annual decline in imports since last August, occurring despite Tokyo’s large-scale stimulus package, the first under the Takaichi administration.