Mount Fuji, Japan

Japan Trade May 2024

Japan: Merchandise exports accelerate in May

Yen-denominated merchandise exports shot up 13.5% in annual terms in May, following April’s 8.3% rise. May’s result marked the most robust expansion since November 2022 and beat market expectations for the fifth time in six months. Looking at a breakdown by good, car and semiconductor exports continued to drive momentum. In part, shipments were likely boosted by a weaker yen. Less positively, this weaker currency, in turn, appeared to raise the import bill, with yen-denominated merchandise imports expanding 9.5% on an annual basis in May (April: +8.3% yoy), marking the strongest result since January 2023.

As a result, the yen-denominated merchandise trade balance deteriorated from the previous month, recording a JPY 1.2 trillion deficit in May (April 2024: JPY 0.5 trillion deficit; May 2023: JPY 1.4 trillion deficit).

After plunging in Q1, our panelists expect real exports of goods and services to moderately recover in Q2, boosted by rising global demand for electronics, the re-opening of a Toyota subsidiary and the recovery from an earthquake in January. That said, further closures at car manufacturers—following a recent government probe into falsified safety data—pose a downside risk.

Nomura analysts said:

“After adjusting for inflation and seasonality, we estimate that real goods exports fell by 2.2% m-m in May 2024, declining for the first time in three months. The Apr–May 2024 average was 2.3% higher than the Jan–Mar average.”

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