Key facts
- Japan recorded a trade deficit in May.
- The May trade deficit was the first in four months.
- Imports of electrical machinery jumped 31.5% in May.
- AI demand for computer chips drove the surge in electrical machinery imports.
- Japan's exports rose 17% in May.
- Japanese manufacturers' sentiment improved for the second consecutive month in June.
- Manufacturers' sentiment reached plus-13 in June, up from plus-8 in May.
- Robust semiconductor demand boosted sentiment in chemicals and machinery sectors.
- Non-manufacturers' sentiment also rose.
- Future outlooks are cautious due to geopolitical risks and supply chain issues.
- Japan's ruling Liberal Democratic Party is exploring new regulations.
- The regulations aim to increase transparency of activist investor activities.
Japan experienced a trade deficit in May, marking the first such occurrence in four months. This deficit was largely attributed to a substantial 31.5% increase in imports of electrical machinery, a surge directly linked to the high demand for computer chips driven by artificial intelligence applications. Although Japan's exports saw a rise of 17% during the same period, this growth was insufficient to counteract the significant escalation in import costs.