The FINANCIAL — After a significant decrease in 2009 following the financial crisis, the value of European Union (EU) imports of goods from Japan recovered until 2011 and then fell continuously to stand in 2014 at €54.6 bn, the lowest level recorded over the last ten years.
Exports, which declined only slightly in 2009, then recovered more strongly to reach a peak of €55.7 bn in 2012, and then slightly decreased over the following years to €53.3 bn in 2014. As a result, the EU trade deficit with Japan, which had constantly been above €20.0 bn between 2004 and 2011, has considerably reduced during the last three years to be almost in balance in 2014 at -€1.3 bn, according to EU.
While it was among the top 5 trading partners of the EU in 2004, Japan is now the seventh most important EU trading partner, accounting for just over 3% of total extra-EU trade in goods in 2014. Over this 10-year time period, the share of Japan in extra-EU imports dropped from 4.6% in 2004 to 3.1% in 2014, while its share in exports more than halved (7.3% in 2004 vs. 3.2% in 2014).
Manufactured goods dominate both imports and exports
EU trade in goods with Japan is clearly dominated by manufactured goods, which accounted in 2014 for 97% of total EU imports from Japan and 84% of EU exports to Japan. The €7.6 bn deficit recorded by the EU for its trade of manufactured goods with Japan is partially offset by an EU surplus in primary goods (+€6.1 bn), in particular for food and drink (+€4.7 bn).
Germany, main EU trading partner with Japan for both exports and imports
Among the EU Member States, Germany (€17.1 bn or 32% of EU exports of goods to Japan) was by far the largest exporter to Japan in 2014, followed by France (€6.8 bn or 13%), Italy (€5.4 bn or 10%) and the United Kingdom (€5.2 bn or 10%). Compared with 2013, exports to Japan decreased in each of these four largest partners, except the United Kingdom. At EU level, exports of goods to Japan slightly decreased by 1% in 2014.
Germany (€14.5 bn or 27% of EU imports of goods from Japan) was also the largest importer from Japan in 2014, ahead of the Netherlands2 (€9.5 bn or 17%), the United Kingdom (€7.7 bn or 14%), Belgium2 (€5.5 bn or 10%) and France (€4.2 bn or 8%). Among these top 5 EU importers from Japan, imports decreased in 2014 in all except Germany. EU imports of goods from Japan dropped by 4% in 2014.
Half of the EU Member States recorded a surplus in trade with Japan in 2014, with the highest being recorded in Italy, France and Germany (all around +€2.6 bn). In contrast, the largest deficits were observed in the Netherlands (-€6.0 bn), the United Kingdom and Belgium (both -€2.4 bn).
Financial and communication services boost EU surplus in trade in services with Japan
EU exports of services to Japan slightly increased between 2012 and 2014, from €24.0 bn to €25.6 bn. In the meantime, imports remained almost stable (€15.7 bn in 2012 vs. €15.3 bn in 2014). As a result, the EU surplus in trade in services with Japan grew by €2.0 bn over the last three years, from €8.3 bn in 2012 to €10.3 bn. The surplus in 2014 was mainly due to surpluses in financial services (+€4.0 bn), telecommunications, computer, and information services (+€3.1 bn) and travel (+€1.7 bn). Japan accounted in 2014 for just over 3% of total extra-EU trade in services.
EU disinvestments in Japan in 2014
Foreign Direct Investment (FDI) flows between the EU and Japan showed large variations in 2014, compared with previous years. After three consecutive years of investment between 2011 and 2013, the EU disinvested in Japan in 2014 by €18.9 bn. 2014 also marked a break in Japanese investment flows into the EU, with investments close to zero, while significant investments were recorded the previous three years.
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