Japan’s exports grow at fastest pace since 2022 on chip, car demand
The value of exports rose 23.2 per cent in July from a year earlier.
Japan's exports surged to the fastest pace since 2022, driven by strong demand for chips and cars, according to the Finance Ministry's report on August 20. The value of exports increased by 23.2% year-on-year, surpassing economists' median forecast of 20.1%. This marked the quickest advance since October 2022. Imports, on the other hand, grew at a faster rate of 27.8%, outpacing the previous month's 25.4% rise and economists' estimate of 25.1%. The trade deficit widened to 634.5 billion yen, the third consecutive month in the red.
The surge in exports can be attributed to robust demand for semiconductor manufacturing equipment and components, fueled by the recent AI boom. Chemical products also saw a rise in exports, possibly due to easing supply constraints on naphtha. The weak yen, which hit a 40-year low against the US dollar, further bolstered the value of shipments, making Japanese products more competitive in overseas markets.
Key drivers of the latest export growth included outbound shipments of electronic components, including semiconductors, which rose by about 49%. Passenger car shipments increased by 21%, while shipments to the US climbed by 22%, while those to China and Europe grew by 25.8% and 19.1%, respectively.
Meanwhile, the ongoing war in Iran had an impact on Japan's energy procurement patterns. Oil imports surged nearly 88% year-on-year, with the volume increasing by 5.5%. The proportion of imports from the US rose to 36% of the total by volume, up from 7% in February, while the proportion coming from the Middle East fell to 59%. Despite uncertainty surrounding the conflict, Japan has continued to secure alternative supplies from the US, according to Yuki Ito, an economist at Nomura Securities.
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