Japan extended a string of trade deficits in May, official data showed Wednesday, as the country's import costs rose on the weak yen, but shipments to the United States and China soared.
The strong export data -- up 10.1 percent over last year -- comes after earlier figures showed the world's third-largest economy grew faster than expected in the first quarter, as Japanese Prime Minister Shinzo Abe's administration works to stoke growth with a plan dubbed "Abenomics".
The yen's sharp drop since late last year makes Japanese exporters more competitive overseas and inflates the value of their repatriated overseas earnings.
"It is not just the weaker yen increasing the value of exports, the amount of exports is increasing as well," Junko Nishioka, chief economist at RBS Securities Japan, told Dow Jones Newswires.
"This shows Japanese companies are increasingly in better shape... Their profitability is also rising these days, meaning they are becoming more resilient to potential external shocks," she added.
However Hideki Matsumura, senior economist at The Japan Research Institute, warned that returning to a trade surplus could be some way off.
"In order for us to see a surplus, we need to see a significant increase in export quantity, as well as a resurgence in overseas economies," Matsumura said.
In April, new leadership at the Bank of Japan -- handpicked by Abe -- vowed to hit a two-percent inflation target within two years, jack up asset purchases including government bonds, and double the money supply.
The ambitious target, a key part of Abe's bid to stoke the deflation-plagued economy, is aimed at reversing years of falling prices that have crimped private spending and business investment.
Last week, the BoJ said the economy was "picking up" as it held off ramping up April's huge stimulus scheme, part of a wider plan that includes big government spending and structural reforms to the lumbering economy.
On Wednesday, finance ministry data showed that Japan's trade deficit expanded 9.5 percent from a year earlier to 993.9 billion yen ($10.4 billion), the longest running string of monthly deficits in three decades.
But May's deficit was smaller than expected as the market had forecast a shortfall of around 1.2 trillion yen.
Exports rose 10.1 percent to 5.76 trillion yen, growing for the third straight month on higher shipments to the United States and China.
But exports to recession-hit Europe remained weak, falling 4.9 percent.
Imports meanwhile also climbed 10.0 percent, an increase for the seventh consecutive month, as costs of fuel and other items jumped due to a weaker yen.
Japan's fuel imports have soared as most of its nuclear reactors remain off-line since the huge earthquake and tsunami in 2011 sparked the world's worst atomic accident in a generation.