Japan saw a significant increase in export values during May 2026, marking the ninth consecutive month of growth, according to official figures released on Wednesday. The rise was fueled by a weaker yen, elevated commodity prices, and heightened demand for semiconductors, which counteracted supply issues linked to the U.S.-Iran conflict.
Artificial intelligence-related demand has helped offset some of the challenges posed by disrupted global trade routes. Japanese exports by value grew by 17% compared to May last year, surpassing expectations from economists surveyed, who had forecast a 16.2% rise. In contrast, export volumes edged up only 0.5%.
Products tied to technology, especially electronic components, contributed to the overall rise as the AI sector and data center expansion drove up prices for memory chips and non-ferrous metals.
Shipments to China climbed 17.9%, and exports to the United States increased by 12.5% from a year earlier. Meanwhile, exports to the Middle East declined by 32%, reflecting impacts from the regional conflict.
Semiconductor exports stood out, rising 61.2% year-on-year in value. Car shipments also posted solid gains with a 16.4% increase. While exports remain a crucial part of Japan’s economic expansion, analysts cautioned that current momentum could fade if global demand for Japanese manufactures slows outside of AI-related products.
On the import side, Japan recorded a 12.5% annual gain in May, slightly below market predictions. Petroleum imports were notably weak, falling 28.5% as Middle East tensions disrupted supply. The closure of the Strait of Hormuz pushed up the cost of crude in yen terms, while import volumes from the Middle East dropped over 61%.
These developments resulted in a trade deficit of 378.7 billion yen ($2.36 billion) for the month, smaller than economists’ projected deficit. The data also showed that Japan’s core machinery orders increased by 8.7% in April, suggesting that companies may be stepping up investment.
Japan has attempted to limit the impact of energy supply disruptions by sourcing crude oil from nations outside the Middle East, particularly the United States, but such measures have only partially compensated for lost volumes. Recent diplomatic steps between the U.S. and Iran to reopen the Strait of Hormuz could provide relief, though analysts stressed it will take time for shipping activity and infrastructure to fully recover.
On Tuesday, the Bank of Japan raised its policy rate to 1%, marking the highest level in more than three decades as inflation persists and the yen stays weak. A depreciated currency tends to benefit exporters but also increases imported inflation, affecting domestic purchasing power.
