Japan’s exports jumped 16.8% in January, marking the strongest annual increase in over three years and offering support to a fragile economy.
Robust shipments to China ahead of the Lunar New Year drove the surge, though analysts caution seasonal distortions may have inflated the headline figure.
Manufacturers’ confidence improved in February for the first time in three months, helped by stronger machinery orders and a weaker yen.
Prime Minister Sanae Takaichi’s fiscal stimulus, including tax cuts and spending plans, is expected to bolster domestic demand.
However, her proposals risk renewed pressure on the yen and government bonds, complicating coordination with the Bank of Japan.
The IMF praised Japan’s resilience to global shocks but warned that risks remain tilted to the downside.
Rising trade frictions, particularly with China and the United States, could weaken exports and industrial output in coming months.
With debt levels high and fiscal space limited, policymakers face a delicate balance between supporting growth and maintaining financial stability.
