Japan exports surge 17% on chip, auto demand, strongest growth since 2022

Japan’s exports grew at their fastest pace in more than three years in May, driven by strong demand for semiconductors and automobiles, government data showed Wednesday. Exports rose 17% from a year earlier, accelerating from a 14.8% increase in April and exceeding market expectations of 16.2%, according to Finance Ministry data. The increase marked the strongest export growth since November 2022. Semiconductor exports jumped 61.2% in value terms from a year earlier, supported by continued global demand linked to artificial intelligence. Automobile exports rose 16.4%.

Regional trends and currency effects

Exports to China, Japan’s largest trading partner, increased 17.9%, while shipments to the US climbed 12.5%. However, exports to the Middle East fell 32% amid disruptions to regional trade flows caused by the US-Iran war. Despite the strong headline figure, export volumes increased just 0.5%, indicating that part of the rise in export value reflected higher prices and the weakness of the yen. A weaker yen tends to boost Japanese exporters by making their products more competitive overseas, but it also increases import costs and can add to domestic inflationary pressures.

Imports and policy context

Imports rose 12.5% from a year earlier in May, the fastest pace since January 2025, though slightly below market forecasts of 12.8%. Petroleum imports fell 28.5%, affected by disruptions linked to the Middle East conflict. The trade figures were released after the Bank of Japan raised its policy rate by 25 basis points to 1%, the highest level in more than three decades, as policymakers sought to address persistent inflation and yen weakness.