Japan exports grew to fastest pace since November 2022

Source Credit : Portfolio Prints

Japan’s export growth accelerated sharply in June, rising 19.3% year-on-year—the fastest pace since November 2022—driven by robust demand for semiconductor manufacturing equipment and a weaker yen. The increase exceeded Reuters economists’ forecast of 18.6% and improved from May’s 16.8% growth.

Exports to Asia surged 22.7%, led by a remarkable 46.4% jump in shipments to Taiwan. Exports to China, Japan’s largest trading partner, rose 17.6%, while exports to the United States increased 13% compared with a year earlier.

A major contributor to the export boom has been the semiconductor sector. The global artificial intelligence (AI) surge has boosted demand for chips and chipmaking equipment, benefiting Japanese technology firms such as Tokyo Electron, Renesas Electronics, and Advantest, whose shares have gained between 50% and 93% this year. Semiconductor exports alone climbed 53.8% in June.

Despite the strong increase in export values, export volumes edged up by only 0.2%, suggesting that higher prices rather than stronger demand accounted for much of the growth. Marcel Thieliant, Head of Asia-Pacific at Capital Economics, noted that rising export values largely reflect soaring export prices, driven by both the yen’s depreciation and higher memory chip prices.

The Japanese yen remains near multi-decade lows, trading around ¥163 per U.S. dollar. Following the export data release, the Nikkei 225 index rose 1.56%.

Exports continue to play a crucial role in supporting Japan’s economy. The country’s GDP expanded by 0.5% quarter-on-quarter in the first quarter, equivalent to an annualized growth rate of 1.8%.

Imports also recorded strong growth, increasing 25.4% year-on-year in June—the fastest pace since November 2022 and well above expectations for a 21% rise.

A significant factor behind the surge in imports was energy. Petroleum imports jumped 59.3% from a year earlier as Japan grappled with elevated oil prices linked to the Iran conflict. According to the International Energy Agency, Japan relies on imports for more than 87% of its energy needs.

Thieliant noted that while crude oil imports rebounded strongly in June, disruptions related to the Strait of Hormuz are likely to keep import volumes below pre-conflict levels for some time.

The Bank of Japan also highlighted improving global economic conditions in its June monetary policy meeting, citing stronger overseas demand fueled by AI-related investment. The central bank observed that improving export performance has helped offset earlier trade-related pressures and reduced concerns about a broader economic slowdown.