Key facts
- Japan's total exports increased by 17% year-on-year in May.
- Export volumes rose by only 0.5%, indicating price-driven gains.
- Strong demand for AI-related electronic components boosted growth.
- Exports to the U.S. grew 12.5% and to China rose 17.9%.
- Japan reported a trade deficit of 378.7 billion yen ($2.36 billion) for May.
Japan's exports saw a 17% year-on-year increase in May, marking the ninth consecutive month of growth. This expansion was largely driven by a weaker yen and higher commodity prices, alongside robust demand for semiconductors fueled by the global artificial intelligence boom. However, export volumes grew by a mere 0.5%, indicating that the gains were primarily price-led rather than volume-driven.
Exports of electronic components were a key driver, with strong demand from AI and data centers pushing up prices for memory chips and non-ferrous metals. Exports to the United States rose 12.5% and to China increased by 17.9%.
Overall imports grew 12.5% year-on-year, despite a significant 28.5% drop in the value and 57.3% drop in the volume of crude oil imports. This was due to sharply increased prices for crude and related products following disruptions in the Strait of Hormuz. As a result, Japan recorded a trade deficit of 378.7 billion yen ($2.36 billion) in May.
Separate data revealed that Japan's core machinery orders increased by 8.7% in April from the previous month, suggesting a potential uptick in business investment. The country, heavily reliant on imported energy, has faced higher costs due to supply route disruptions, with efforts to diversify procurement not fully offsetting the impact.