Japan's trade balance shifted to a deficit of JPY 406.9 billion in June 2026, from a surplus of JPY 122.3 billion in the same month a year earlier, and far exceeded market expectations for a JPY 120 billion shortfall. It marked the second consecutive monthly trade gap, with imports outpacing exports. Imports surged 25.4% year-on-year to a record peak of JPY 11,335.9 billion, accelerating from May's 12.5% rise, beating forecasts of 21%, and marking the fifth straight month of growth and the strongest increase since November 2022. The sharp rise in purchases reflected robust domestic demand, boosted by the government's late-2025 stimulus measures. Meanwhile, exports climbed 19.3% to a three-month high of JPY 10,929.0 billion, the strongest gain since November 2022, surpassing expectations of 18.6%. It was the tenth month of export growth, driven by a weaker yen and robust demand for AI-related semiconductors and data center equipment despite supply disruptions from the war in Iran.