Japan is one of Ukraine's leading trading partners in the Indo-Pacific region. Until 2022, bilateral trade in goods and services demonstrated a positive dynamic of gradual growth. Traditionally, Ukraine-Japan trade has been characterized by a negative balance for Ukraine in terms of goods and a positive balance in terms of services.

As a result of the full-scale Russian aggression against Ukraine, disruption of logistics chains, and increased shipping costs, the volume of trade in goods and services between Ukraine and Japan halved in 2022 (-52.1%) to $761.13 million. Japan ranked only 5th among Indo-Pacific countries and 28th globally in terms of trade volume with Ukraine.

By the end of 2023, there was a revival of trade and economic cooperation, with the volume of trade in goods (excluding services) increasing by 25.7% to $943.3 million.

This trend continues, with trade turnover reaching $513.3 million in the first six months of 2024, an increase of 19.4% compared to the first six months of 2023.

Dynamics of Bilateral Trade in Goods and Services

(USD million)

  

2019		2020		2021		2022		2023 (goods only)		2024 (6 months)
1237,7	↑+24,9%	1275,2	↑+3,0%	1589,67	↑+24,7%	761,13	↓-52,1%	943,3	↑ 25,7%	513,3	↑ +19,4%

Data from the State Statistics Service of Ukraine; 2023 data from the State Customs Service of Ukraine; % change compared to the same period of the previous year.

Trade in Goods

(USD million)

	2021	2022	2023 (goods only)	2024 (6 months)
Trade Volume	1 574,09   ↑ +25,1%,	750,17   ↓ -52,4%	943,3 ↑ +25.7%	513,3↑ +19,4%
Export	347,24      ↑ +91,1%,	105,98   ↓ -69,5%	35,05 ↓ -66.9%	23,097↓ -10,2%
Import	1 226,85   ↑ +14%,	644,19   ↓ -47,5%	908,2 ↑ +41%	490,2↑ + 26 %
Balance	- 879,61	- 538,21	-873,1	-467,1

 

Structure of Exports to Japan

The structure of exports to Japan remains almost unchanged, with key commodities being corn, raw materials for steel production, and aluminum.

 Main Export Categories (First 6 Months of 2024):

• Corn (41%) – $9.398 million
• Unwrought Aluminum (27%) – $6.306 million
• Prepared or Preserved Tomatoes (without vinegar) (5%) – $1.233 million
• Hydrogen, Inert Gases, and Other Nonmetals (4%) – $0.877 million
• Diagnostic or Laboratory Reagents (3%) – $0.806 million
• Natural Honey (3%) – $0.717 million
• Other Goods (16%) – 590 positions

 Structure of Imports from Japan

The volume of imports from Japan is gradually increasing, primarily due to the rising sales of Japanese cars and electrical appliances to Ukraine.

 Main Import Categories (First 6 Months of 2024):

• Passenger Cars and Other Motor Vehicles (60%) – $293.74 million
• Medical, Surgical, Dental, or Veterinary Instruments and Apparatus (3.4%) – $16.643 million
• Products of Iron or Steel for Railway or Tramway Track Construction (2.9%) – $14.226 million
• Parts and Accessories for Vehicles (2.4%) – $11.912 million
• Centrifuges; Filtering or Purifying Machinery and Apparatus for Liquids or Gases (1.1%) – $5.412 million
• Self-propelled Bulldozers, Graders, Levellers, Scrapers, Mechanical Shovels, Excavators, Single-bucket Loaders, Road Rollers, etc. (1.6%) – $7.971 million
• Other Goods (28.6%) – 590 positions*

Trade in Services

The volume of bilateral trade in services between Ukraine and Japan decreased by 30.6% in 2022, totaling $10.97 million (exports down 22.7% to $9.9 million; imports down 64.2% to $1.07 million) due to the Japanese Government's recommendation to restrict travel to Ukraine due to the war. However, there was an increase in the provision of business, transport, and telecommunication services.

Structure of Service Exports (2022):

• Telecommunications, Computer, and Information Services (29.5%): $2.92 million, ↑5.1%
• Transport Services (27.6%): $2.73 million, ↑2.9 times
• Business Services (26.7%): $2.64 million, ↓62.4%
• Maintenance and Repair Services Not Included Elsewhere (10.6%): $1.05 million, ↓26.7%
• Financial Services (3.3%): $0.33 million, ↓19.1%

 

Structure of Service Imports (2022):

• Government and Official Services (28.6%): $0.31 million, ↓62.1%
• Transport Services (27.7%): $0.3 million, ↑69.4%
• Financial Services (14.5%): $0.15 million, ↓71.7%
• Business Services (11.9%): $0.13 million, ↑3 times
• Insurance Services (8.6%): $0.09 million, ↓29.3%

Investment Cooperation

According to the National Bank of Ukraine (last updated on January 13, 2023), foreign direct investment (FDI) from Japan into the Ukrainian economy as of December 31, 2021, amounted to $227.1 million, with Japan's share in the total FDI volume in Ukraine being 0.5%.

The largest volume of Japanese investments was directed to the wholesale and retail trade sector; repair of motor vehicles and motorcycles, amounting to $222.2 million (over 97%). These investments were primarily in the development of service networks for Toyota, Mazda, Subaru, and others, facilitated by trading houses such as Sumitomo, Itochu, and Sojitz. Major trading houses and companies such as Mitsubishi, Sumitomo, Marubeni, Itochu, Sojitz, Mitsui, and Rakuten Viber operate in Ukraine.

Japanese investments in Ukraine also entered sectors such as agriculture, forestry, and fishing; construction; professional, scientific, and technical activities; and real estate operations. However, since these investments were made by no more than two business entities, their volume information is confidential according to the Law of Ukraine on State Statistics.

According to the National Bank of Ukraine (last updated on April 15, 2022), there were no FDI from Ukraine into the Japanese economy as of December 31, 2021.

 Important events in the economic area of cooperation

In 2021, the Japanese market was opened for the export of milk and dairy products from Ukraine.

In November 2020 and February 2021, despite the coronavirus pandemic, two online trade missions were conducted in cooperation with the Ukrainian company "COIN."

In June 2021, the online event "USF Japan Roadshow" was held.

In March 2021, Hitachi, Ltd acquired the American IT company GlobalLogic, which has several offices in Ukraine and is among the top three IT employers in Ukraine.

In December 2021, the Ukrainian IT company ELEKS established a joint venture in Japan – ELEKS Japan.

In August 2022, the Ukrainian IT company CHI Software opened an office in Kobe, Japan.

On August 2, 2023, the Financial Dialogue between the Ministries of Finance of Ukraine and Japan was initiated.

On August 2, 2023, the Japanese company Rakuten Symphony signed a memorandum of understanding with the global digital operator VEON Ltd., the parent company of Kyivstar. The parties to the memorandum agreed to create a "reliable and promising telecommunications infrastructure" to ensure uninterrupted high-speed connectivity, enhanced by 5G, for providing new generation digital services in Ukraine.

On November 1, 2023, the first meeting of the Ukraine-Japan Joint Working Group on Agricultural Recovery Strategy was held.

On November 20, 2023, a business mission from Japan to Ukraine and a business forum were held, with the participation of representatives from the governments and businesses of both countries.

On February 19, 2024, the Ukraine-Japan Conference on Economic Development and Reconstruction of Ukraine was held in Tokyo, chaired by the heads of governments Denys Shmyhal and Fumio Kishida, with about 200 business representatives from both countries. During the conference, 56 bilateral documents (G2G, G2B, B2B) were signed, including those related to creating favorable conditions for the development of trade, economic, and investment cooperation. The heads of the governments of Ukraine and Japan, Denys Shmyhal and Fumio Kishida, agreed to start negotiations on revising the bilateral agreement on investment promotion and protection and to open a JETRO office in Ukraine soon.

On February 20, 2024, a business forum was held in Tokyo with 100 business representatives from both countries, organized by the Chambers of Commerce and Industry of Ukraine and Japan.

On March 19, 2024, a webinar with about 400 Japanese business representatives was held on "The Business Environment in Ukraine for Reconstruction."

On April 5, 2024, the second meeting of the Ukraine-Japan Joint Working Group on Agricultural Recovery Strategy was held.

On April 23-24 and June 6-7, 2024, two business missions from Japan to Ukraine took place, consisting of representatives from the economic block of the government and business circles of Japan. During the latter mission, a Ukraine-Japan business forum was held at the Ukrainian Chamber of Commerce and Industry on June 7.

On June 10, 2024, a Japan-Ukraine Round Table was held in Berlin with the participation of government and business representatives from both countries, ahead of URC 2024. During the round table, 23 bilateral G2G and B2B memorandums were signed.