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Japan exports surge 23.2% in July, but volume growth remains modest
The nominal export gain was outweighed by imports rising 27.8% and widening the trade deficit to JPY 634.5bn, driven in part by a surge in petroleum import values.
Japan’s exports accelerated to 23.2% year over year in July, beating the 19.9% consensus and representing the fastest growth since October 2022, as semiconductor-related demand supported overseas shipments. Electrical machinery exports rose 29.4%, and semiconductor-related shipments jumped 49.1% in value. Machinery exports increased 18.4%, including 40.9% growth in semiconductor manufacturing equipment, while motor vehicle exports climbed 19.5%, according to Action Forex.
Action Forex said the headline export figure overstates underlying real demand because weak yen effects and higher selling prices boosted nominal values. Export volumes rose 5.2%, while a split also showed up in autos, with passenger-car export value up 20.8% but unit shipments increasing only 1.2%. By contrast, semiconductor machinery quantities rose 36.4%, suggesting more genuine strength tied to AI-related capital spending.
Imports accelerated faster than exports, increasing 27.8% year over year versus a 26.5% expected pace, the strongest since November 2022. That outpaced export growth and widened the trade deficit from JPY 156.3bn a year earlier to JPY 634.5bn, with an Iran conflict linked oil-price surge cited as a major factor as petroleum imports jumped 87.8% in value, Action Forex added.
The report framed the external sector as still supportive for Japan’s growth, noting the sector’s strong contribution to second-quarter GDP and AI demand lifting industrial exporters. However, it emphasized that only a fraction of the nominal export increase came from higher volumes, while more expensive imported energy overwhelmed the trade-balance gains.