Summary

• Japan is displaying some resilience despite energy shocks.
• Its trade balance remained in the surplus zone, driven by stronger-than-expected exports. Machinery orders were also stable in the first quarter.
• The global AI boom and the expansion of power generation facilities are among the main drivers of these strong outcomes. Although Japan is not a leading chip manufacturer, it benefits from strong demand and supply shortages, with exports up 41.6%.
• Recent data, and hawkish remarks from a top BoJ official, raise the odds of a June rate hike.

By Min Joo Kang, Senior Economist, South Korea and Japan

Exports increased for major products and markets, especially to the EU and China

Japan’s exports rose a stronger-than-expected 14.8% year-on-year in April (vs. 11.7% in March, 9.2% market consensus, 11% ING). Major product

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