Source Credit : Portfolio Prints
Japanese exports rose for an eighth consecutive month in April, beating market expectations as resilient global demand helped cushion the impact of major supply disruptions triggered by the U.S.-Israeli conflict with Iran.
The strong trade performance follows data released on Tuesday showing Japan’s economy expanded at a faster-than-expected annualised rate of 2.1% in the first quarter of 2026, supported by solid exports and steady consumer spending. Economists, however, warn that momentum could come under significant pressure in the current quarter.
Total exports by value climbed 14.8% in April from a year earlier, government data showed on Thursday, well above the median market forecast for a 9.3% increase and following a revised 11.5% rise in March.
Exports to the United States increased 9.5% year-on-year, while shipments to China jumped 15.5%, underscoring continued demand from Japan’s two largest trading partners.
Imports rose 9.7%, also surpassing expectations for an 8.3% gain, despite a sharp decline in oil imports.
Crude oil shipments plunged 64% in volume terms, marking the steepest fall since 1980, according to a finance ministry official. In value terms, crude oil imports dropped 49.9%, the sharpest decline since the COVID-19 pandemic in November 2020. Increased crude imports from the United States helped partially offset the shortfall.
Japan has sought to diversify its energy procurement away from the Middle East by securing alternative supplies, including from the U.S., but those efforts were insufficient to fully counter the disruption caused by the conflict.
As a result, Japan posted a trade surplus of 301.9 billion yen ($1.90 billion), compared with market expectations for a deficit of 29.7 billion yen.
“Beyond higher crude prices, the prices of petroleum-related products such as naphtha are also increasing,” said Koya Miyamae, Senior Economist at SMBC Nikko Securities. “In the future, trade deficits are likely to widen.”
Despite the closure of the Strait of Hormuz driving up energy costs and disrupting supplies of oil and industrial inputs, exports remained relatively resilient as manufacturers continued relying on existing inventories and Japan’s substantial strategic oil reserves.
Analysts cautioned that prolonged disruption to Middle Eastern shipping routes could eventually weigh on both imports and exports by driving up production costs and weakening global demand, particularly in energy-intensive industries such as chemicals.
Separate data released on Thursday showed Japan’s core machinery orders fell 9.4% in March from the previous month, marking the first decline in two months and a steeper drop than the median forecast of 8.1%.
Meanwhile, a private-sector survey pointed to weakening business sentiment. Manufacturing activity slowed slightly in May, while growth in the services sector stalled for the first time in more than a year as rising costs linked to the Middle East conflict weighed on confidence.
