Japan's merchandise exports extended a run of growth to six months in February, with the value of shipments up 4.2% year-on-year, according to official figures released on Wednesday. The outcome surpassed the median market expectation of a 1.6% increase and points to ongoing external demand, particularly within Asia.
The pattern of trade flows this year has been influenced by the timing of China's Lunar New Year. A later-than-usual holiday this year prompted forward-loading of shipments to China in January, which pushed that month's exports up by 16.8% and distorted comparisons across recent months.
Detailed sectoral destination figures for February showed divergent outcomes. Exports to the United States fell 8.0% from a year earlier, while exports to China were down 10.9%. By contrast, shipments to the rest of Asia rose 2.8%, underlining regional demand as a moderating factor for the overall headline result.
Imports climbed 10.2% in February compared with the same month a year earlier, slightly below market expectations of an 11.5% increase. The combination of stronger imports and the export outturn left Japan with a trade surplus of 57.3 billion yen in February, a sharp reversal from consensus forecasts that had pointed to a deficit of 483.2 billion yen.
On the domestic growth front, Japan's economy has shown modest recovery momentum. Growth in the final three months of 2025 was revised up to an annualised 1.3%, a revision attributed to robust business investment in that period.
At the same time, analysts cautioned that rising oil prices, driven by conflict in the Middle East, create a clear downside risk. They warn that higher energy costs are heightening stagflation concerns for the world's fourth-largest economy, which remains heavily reliant on energy imports.
The Bank of Japan is widely expected to hold interest rates steady when its two-day policy meeting concludes on Thursday. Policymakers are also anticipated to signal a continued tightening bias, as a weak yen and elevated oil prices contribute to inflationary pressures in Japan.
Exchange rate used in reporting: $1 = 158.8800 yen.
Brief analysis - February's trade figures show that regional demand, especially within Asia, is sustaining Japan's export expansion even as shipments to major markets such as the United States and China fell. Stronger imports narrowed expectations of a deficit and resulted in an unexpected surplus for the month. The combination of a fragile yen and rising oil costs is complicating the policy backdrop for the Bank of Japan.