Key facts
- Japan's exports rose 17% year-on-year in May, surpassing market expectations.
- Strong demand for semiconductor-related goods supported Japan's export growth.
- Imports into Japan increased 12.5% in May, with crude oil shipments falling 28.5%.
- Japan recorded a trade deficit of 378.7 billion yen in May.
- Geopolitical tensions in the Middle East have disrupted supply chains and increased energy costs.
Japan's exports experienced a significant 17% year-on-year increase in May, exceeding market forecasts and marking the ninth consecutive month of growth. This resilience was largely attributed to sustained global demand for semiconductor-related goods, including chip-making equipment and electronic components, reflecting ongoing investment in advanced technologies like AI and data centers.
However, the overall trade picture was impacted by geopolitical tensions in the Middle East. Despite the strong export performance, Japan's imports grew by 12.5%, falling slightly short of forecasts. Notably, crude oil import volumes plunged by 28.5% in value terms due to disruptions in shipping routes, particularly the closure of the Strait of Hormuz, which drove up energy prices. This led to a trade deficit of 378.7 billion yen ($2.36 billion) for May.
Retailers in the U.S. also accelerated imports in May, with the Port of Los Angeles handling near-record volumes, driven by fears of rising fuel costs and potential scarcity caused by Middle East shipping disruptions. Total U.S. container import volumes rose 11.5% year-over-year, with plastic goods imports seeing a substantial 26% increase. Vessel operators are planning to implement higher fuel surcharges starting July 1, adding to cost concerns for businesses.