Japan’s exports rose at their quickest pace in more than three years in May, as strong demand for semiconductors and vehicles gave the country’s trade-reliant economy a fresh boost despite concerns over the weaker yen and slowing global growth.
Official figures showed that exports increased 17% from a year earlier, beating the 16.2% rise expected by economists surveyed by Reuters. The result also marked an acceleration from April’s 14.8% gain, making it the strongest annual increase since November 2022.
The figures were led by a sharp rise in technology shipments, with semiconductor exports jumping 61.2% in value terms from the same month last year. Demand has been supported by rapid investment in artificial intelligence, data centres, and advanced electronics, areas where Japanese suppliers remain closely tied to global manufacturing chains. Car exports also performed strongly, rising 16.4% over the same period.
The broader trade picture was more mixed. Shipments to China, Japan’s largest trading partner, climbed 17.9%, while exports to the United States increased 12.5%. However, exports to the Middle East fell 32%, reflecting pressure from the U.S.-Iran conflict and its effect on regional trade flows.
Despite the strong headline number, export volumes rose only 0.5%, suggesting that much of the increase came from higher prices and the weak yen rather than a major rise in goods shipped. A softer currency can help exporters by making Japanese products cheaper overseas, but it also raises import costs at home, adding pressure on consumers and businesses already dealing with inflation.
Imports rose 12.5% in May from a year earlier, slightly below expectations of a 12.8% increase. Petroleum imports dropped 28.5%, showing the impact of energy market volatility linked to tensions in the Middle East.
The data came after the Bank of Japan raised its policy rate by 25 basis points to 1%, the highest level in more than 30 years. The move reflected policymakers’ efforts to contain inflation while monitoring the strain caused by the yen’s weakness.
Japanese markets showed a muted response after the release. The Nikkei 225 slipped 0.5%, while the yen was little changed at 160.4 against the U.S. dollar.