In May, Japanese exports continued to grow despite adverse factors in the Middle East.

Government data released on Wednesday showed that Japan's exports increased for the ninth consecutive month in May, boosted by strong demand for electronic components, automobiles, and non-ferrous metals. Exports grew by 17.0% compared to the previous year, higher than the 14.8% increase in April, but lower than the 17.7% growth forecasted by economists surveyed by FactSet. Imports in May increased by 12.5%, faster than the 9.8% growth in April. Despite the closure of the Strait of Hormuz reducing the region's oil imports, rising energy costs and the shift to alternative procurement channels may have boosted Japan's import volume. On Tuesday, the Bank of Japan raised its policy interest rate to 1%, the highest level in 31 years. The move comes as policymakers are increasingly concerned about inflationary pressures from oil shocks and a weaker yen, which could further raise import prices. BoJ Deputy Governor Masayoshi Uchida said after the rate hike announcement that the peace agreement between the US and Iran was a welcome development and that the risks of a significant economic downturn had diminished. However, he warned that uncertainties remain around the pace of recovery in the supply chain.