Japan’s exports rose 13.5 percent in May, faster than expected, boosted by a weak yen and powerful demand within the United States and Asia.
Finance Ministry data on Wednesday showed the trade deficit was 1.22 trillion yen ($7.7 billion), down nearly 12 percent from a 12 months earlier of 1.38 trillion yen. Imports rose 9.5 percent year-on-year to just about 9.5 trillion yen ($60 billion).
Exports totaled 8.3 trillion yen ($53 billion), the strongest growth since November 2022. Shipments to the United States rose nearly 24 percent and people to the remaining of Asia rose greater than 13 percent, led by double-digit growth in shipments of vehicles, electronics and machinery.
Trade with Europe declined significantly.
The value of Japanese imports tends to rise when the Japanese yen depreciates against the U.S. dollar and other major currencies. The dollar is currently trading at nearly 158 yen, up from 140 yen a 12 months ago.
Japan is a resource-poor country that imports just about all of its oil. Higher imports of oil, gas and other fuels are a significant component within the deficit in May, for the second month in a row. Fruit imports also increased in May.
However, a key think about the rise in each exports and imports was the general rise in prices, which drove up their value in comparison with the previous 12 months, Marcel Thieliant of Capital Economics explained in a report.
This is reflected within the muted impact of trade on the economy, the shrank by 1.8% in the primary quarter of the 12 months.
In fact, “most of the increase in trading values ​​last year was due to rising prices due to the sharp weakening of the yen, rather than a significant improvement in sales,” it said.
Nevertheless, trade with China, Japan’s second-largest export market after the United States, is reviving because the country’s economy slowly recovers from the shocks of the collapse of the actual estate sector and the aftermath of the Covid-19 pandemic.
Deliveries of machinery and manufacturing components in addition to vehicles showed strong growth.
Also the US economy has remained stable though the US Federal Reserve kept rates of interest at record levels in an try and curb stubbornly high inflation.
The weakness of the yen is a cause for some concern amongst Japanese policymakers. Bank of Japan meeting minutes released on Wednesday showed policymakers debating the impact of the weak yen on inflation, which has remained relatively low compared with other major economies.
Japan’s biggest fear is deflation if prices proceed to fall. This is an indication of a weakening economy and the central bank is attempting to bring a few gradual rise in prices.
“But today’s trade data also showed that it is having a positive impact on exports,” said Yeap Jun Rong, market analyst at IG, in a commentary.
