Market overview

As New Zealand’s fourth largest trading partner, Japan remains a key export partner, with 50% of New Zealand exports in the food and beverage category.

Despite the serious economic impact that the COVID-19 pandemic is having in Japan, New Zealand goods exports continued to perform strongly in March and April, increasing by 28% compared to April 2019; the highest-ever level of exports on record from New Zealand to Japan during the month of April.

A State of Emergency was called in early April, but has now been lifted across Japan.

Tokyo has moved into Step 1 of a 4-step reopening process, allowing the reopening of museums, libraries and indoor sporting facilities, as well as extending the business hours for restaurants and bars until 10pm.

There will be a transitional period assessed every three weeks, and requests for people to stay at home and avoid large gatherings may be eased only gradually. People are asked to refrain from crossing prefectural borders for the rest of the month and the request will be relaxed in stages. Prime Minister Abe plans to end all restrictions by August 2020.

The country still faces challenges in tackling economic recession, caused not only by the effects of COVID-19, but by slower consumer activity following a sales tax increase to 10% in October 2019 and the postponement of the 2020 Tokyo Olympics.

Government statistics from May 2020 confirm Japan’s recession and decreases in key economic indicators, but it is not as bad as previously forecast. Whether these statistics will catch up to the predictions mid-year remains to be seen.

At this stage, there are no major changes to supply chain and logistics within Japan. Air New Zealand has re-started direct air freight flights from 19 May and plans to have two flights per week depending on freight loads. Sea freight has been mostly unaffected during this time.

Supermarkets, in particular, are seeing growth in food and beverage categories, but department stores and food service channels continue to be negatively impacted.

Japanese corporates have been focused on maintaining business as is and securing stability for the current products and relationships they have. This is a difficult time to introduce new products and concepts in Japan, given the importance placed on developing relationships in person - and over a long period of time.

Even with densely populated cities, Japan's acceptance of social discipline and a well equipped health system have helped it manage the impact of COVID-19 better than some other markets, making it an important partner for New Zealand to focus on. When a reset occurs, some of the revenue impacted by COVID-19 will be recovered, as the Japanese start going out and treating themselves and others again.

COVID-19 Market Realities: Japan

Export support
Last updated: 27 Apr 2020
COVID-19 Market Realities: Japan overview, 28 April

Craig Pettigrew (NZTE Trade Commissioner, East Asia) spoke to Beachhead Advisor Sam Cassels and NZTE Business Development Manager Shintaro Nakamura.

Read more

Economy and trade

Japan has struggled with deflation for decades. Its core consumer price index (excluding food and fuel) has fallen for 13 of the last 20 years, and experts predict another round of deflation that may last two years or more.

The formal end to the State of Emergency across Japan in the last week of May was welcome news to the stock markets. The Nikkei Stock Average gained 455.39 points, or 2.20%, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 23.59 points, or 1.5%, at 1,525.79.

The economy is heading for its weakest period since the 2009 financial crisis, according to latest economist projections. Goldman Sachs Group Inc has cut its 2020 expectations for gross domestic product to a 3.1% contraction from a 2.1% drop. Barclays' latest projection is for the economy to shrink 2.6%.

Japan's economy contracted 0.9% in the period January - March 2020, or at an annualised pace of 3.4%, according to the Cabinet Office. This shows that the world's third-largest economy was in a technical recession during this period, which was prior to the declaration of a state of national emergency.

Exports, which make up 16% of Japan's economy, shrank 6% in the quarter, as goods destined for major trading partners stagnated. This is the largest decrease since 2011, when the Great East Japan Earthquake and tsunami struck the country.

For the month of April alone, exports dropped 21.9% year-on-year, following an 11.7% decline in the previous month. Imports were down 7.2% compared to an expected decrease of 12.9%.

The postponement of the Olympics still provides more opportunities for economic growth and positive consumer sentiment in 2021. However, the president of Japan's Olympic organising committee has said the Games would not be postponed again if the pandemic is not under control by next summer - with a vaccine key to this success.

With many Japanese people refraining from going out except for essential reasons following official requests to stay at home, a report from the Cabinet Office in April said private consumption is "decreasing rapidly," compared with "showing weakness recently". In particular, declining consumer spending on food services and trips has been noticeable.

Recent statistics show Japan's unemployment rate increased slightly in March to 2.5%, but remains comparatively low due to the country's labour shortage.

Tourism has dried up entirely, with April international visitor arrivals down 99.9% on 2019 figures to only 2,900 arrivals.

The Japanese economy is likely to be negatively affected by the downturn in the Chinese economy. In 2019, China took 19% of Japan's exports and supplied 24% of its imports. China's production slowdown will likely have negative impacts, with potential shortages in components and materials to manufacturers. Chinese tourism in Japan is also significant, making up 30% of the market in 2019.

One positive feature of the Japanese economy is recent record levels of profit and strong balance sheets for large corporations, which should allow them to ride out the crisis more robustly than those in a lot of other markets.

Supply chain, logistics & freight

The main disruption to the supply chain is generally related to constrained air cargo operations, with ports and internal logistics continuing to mostly operate effectively.

Direct flights between Japan and New Zealand were suspended at the end of March, but direct cargo only flights have resumed from 19 May, with two direct flights operated weekly by Air New Zealand. Visit our Air Freight Options page for more information on these flights. Sea freight operations continue to service Japan regularly with little disruption.

Government support

The Japanese Government is providing a range of packages and support for COVID-19 related impacts on business. New Zealand businesses in Japan are eligible if they have registered entities in Japan. All applications need to be filled in in Japanese, and English speaking local agents are available to help. The main scheme involves Finance Guarantees and Business Packages including grants.

Finance Guarantees

The Japanese Government has launched a Business Finance Guarantee Scheme for small and medium-sized businesses (SMEs). It guarantees up to 100% of the risk for a maximum 20-year bank loan, available for 5% decline in revenue or more, dependent on conditions. The definition of what qualifies as an SME differs depending on which industry is involved. Prefectural governments also offer multiple finance guarantee schemes; for example the Tokyo Metropolitan Government offers a low rate bank loan. This is a lower rate loan (1.5 ~ 2.4% pa. ) for a maximum of 10 years, up to JPY 280 million, available for 5% decline in revenue or more. Strict conditions apply. Please discuss with local agents for further details.

Business Finance Support Packages

Wage Subsidy

The Japanese Government relaxed the conditions to qualify for this subsidy and raised the rate of Employment Adjustment Subsidy, as well as offering an Immediate Employment Security Subsidy for SMEs.

The prerequisite to quality for the wage subsidy has relaxed from 10% to 5% decline in revenue and the rate has increased from two-thirds to four-fifths of individual salaries of SME employees. This subsidy is paid to SME employers.

Government Grants

The Japanese Government announced a multi-billion-dollar support package offering up to JPY 2 million per SME whose revenue has declined 50% when compared with the same month the previous year due to the impact of COVID-19.

Please see this information sheet or discuss with local agents for further details.

Prime Minister Shinzo Abe's cabinet has agreed to a second exceptional budget of 31.91 trillion yen (US$296 billion), including subsidies for small businesses and cash handouts for medical workers. The funding will also be used to help finance rescue programmes and loans for struggling businesses worth 117 trillion yen. Japan's total measures amount to 230 trillion yen when loan schemes are taken into account.


International travel is severely limited to Japan. New Zealand nationals will be denied permission to enter Japan unless there are exceptional circumstances.

The most up to date information on travel restrictions are listed on the Japan Tourism website.

Direct flights between Japan and New Zealand were suspended at the end of March, but direct cargo only flights have resumed.

Japan travel advisory: Safetravel.govt.nz

Tradeshow and event information

Numerous international tradeshows and events are being postponed or cancelled in response to the COVID-19 pandemic.

Make sure you proactively check with organisers for any tradeshow or event you're scheduled to attend – conditions and regulations are changing rapidly overseas, and events may be postponed or cancelled at short notice.

Below is the status of major Japan tradeshows and events that NZTE's teams are aware of.

If you have questions about an event not listed here, please contact the organisers in the first instance or get in touch with NZTE for further advice.

  • The 2020 Olympics will be Japan's largest event casualty this northern hemisphere summer. The event has been postponed, with a new commencement date of 23 July 2021.

  • The Japan International Boat Show 2020 has been cancelled.

  • Retail-tech Japan, China 3-6 March, has been cancelled.

  • Architecture+ Construction Materials Japan, 3-6 March has been cancelled.

  • FOODEX JAPAN 10 – 13 March, has been cancelled.

Sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you'll find information on any COVID-19 effects across important sectors and industries in Japan.

About half of New Zealand’s exports to Japan are in the food and beverage sector. The impacts on those exports reflect their relative exposure to the food service/restaurant sector verses the retail sector.

Exports of horticulture, dairy and meat products have all enjoyed strong growth through March and April; metal products and fisheries have experienced moderate declines; and services exports (tourism and education) have been severely impacted by travel restrictions. Air New Zealand suspended direct passenger flights between Japan and New Zealand on 31 March but resumed cargo only flights from 19 May, reinstating a direct airfreight option for the export of high-value goods. About 77% of New Zealand’s exports to Japan were goods exports and 23% services exports in 2019.

The  Ministry for Foreign Affairs and Trade (MFAT) recently published its Report on Record Goods Exports to Japan - 18 May 2020. 

It shows that goods exports to Japan in April increased by 28 percent compared to April 2019, from $366 million to $467 million, according to provisional Stats NZ data that was recently released. That is the highest-ever level of exports on record from New Zealand to Japan during the month of April.  (The previous record for April was $383 million in 2011.)

The April figures build on the 22% increase in March compared to March 2019.  Exports in March were $352 million, which was the second-highest level of exports from New Zealand to Japan during the month of March (only $1 million behind the record set in March 2001).

Data for New Zealand’s services exports for the January-March quarter is not available yet. The table below shows the five leading service sector exports to Japan in 2019.  The sectors coloured red (88% share of services exports) are experiencing very serious impacts, and the sectors coloured green are experiencing either no material impact or some positive impacts.


Online shopping is taking off in Japan, where it had gained only limited traction before the COVID-19 outbreak.

Government statistics say only 7% of transactions were online in 2018. A survey conducted by the Nomura Research Institute in mid-March, when stay-at-home measures were still relatively relaxed, showed only 10% of respondents in their 20s to 60s shopped online.

But according to the Japan Times, department store operators saw double-digit drops in sales during March, but were reporting higher online revenue, with beauty products selling particularly well. Apparel seller United Arrows Ltd. saw its online sales climb 24% in the same month, while store sales slumped 39%.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

COVID-19 helpline for businesses
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Ministry of Health
WorkSafe New Zealand

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.