Japan's Current Account:

 https://mainichi.jp/english/articles/20210810/p2g/00m/0bu/031000c

Article:

TOKYO (Kyodo) -- Japan's current account surplus grew 50.3 percent in the first half of 2021 from a year earlier to 10.5 trillion yen ($95 billion), boosted by a remarkable improvement in exports from a slump caused by the coronavirus pandemic, government data showed Tuesday.

Among key components, the goods trade balance marked a 2.3 trillion yen surplus, a turnaround from the previous year's 973.5 billion yen deficit, as exports of cars, auto parts and other items rebounded in line with a strong recovery of the global economy from a pandemic-induced slump in early 2020.

Also lifted by brisk shipments of semiconductor producing equipment amid a global chip crunch, exports soared 22.2 percent to 39.2 trillion yen.

Ideas:

A country's or economy's current account is like the country's bank account. Exports put money into the current account and imports take money out of the account.

Car and auto parts no doubt are the main exports drivers for Japan. Semiconductor equipment can also be seen as an important export, as more and more need semiconductor equipment to offset the global chip shortage.

So there are always positives and negatives in any situation. While the global chip shortage is not good on the other side of the coin it provides an opportunity for others to find ways to benefit from the shortage as the producing and selling of more semiconductor equipment.

And that's how a market economy works. Unfortunately the pandemic has brought too much pain and suffering globally. But at the same time, it has brought new innovations in lifestyles, innovations in new jobs and industries and has forced or motivated some companies to change how they do business to survive.

Article:

Imports expanded 11.6 percent to 36.9 trillion yen on the back of higher materials prices such as nonferrous metals and iron ore, the Finance Ministry said.

The year-on-year rise of 50.3 percent, or 3.5 trillion yen, in the current account surplus for the six-month period was the sharpest increase on a value basis since a 4.8 percent trillion yen jump in the second half of 2015, the ministry said.

The surplus of 10.5 trillion yen in the current account balance, one of the widest gauges of international trade, surpassed the pre-pandemic level of a 10.3 trillion yen surplus in the first half of 2019, the ministry said.

Ideas:

An increase in imports should always be taken with a grain of salt, meaning if the prices or value of imports go up, meaning Japan companies and others have to pay more for something overseas, the actual quantity of imports might not be anymore than before. 

So there is always the value of the imports and the quantity of the imports to be considered.

Whenever a company's costs increase the is the possibility that the company, if they can, will "pass on the costs" to the next company or whomever in the supply chain.

But as has been reported recently companies in Japan are reluctant to pass on the increase in costs because of not so good demand in the economy, whether that is companies buying for companies and or the final consumers buying from companies.

Article:

Meanwhile, the services trade balance, which includes cargo shipping and passenger transportation, registered a 2.1 trillion yen deficit, deteriorating from a 1.9 trillion yen deficit a year ago.

The latest services trade deficit was the worst since 2.3 trillion yen red ink in the latter half of 2012.

The travel surplus of 105.5 billion yen was far below the 1.4 trillion yen and 420.7 billion yen logged in the first-six-month periods of 2019 and 2020, respectively, as many countries kept tight international travel restrictions in place due to the pandemic.

Ideas:

The domestic service sector is not doing so good in Japan and then add in the service sector areas such as shipping and passenger transportation and it looks even worse.

The global travel industry is probably not going to improve that much before the spring of 2022 or even the summer of 2022.

The EU, UK, and the US might be improving their travel options but its a long from perfect, as the new variants everywhere will make travel challenging.

While many countries have higher vaccination rates than Japan, the new variants seem to causing many problems still.

It interesting that 2012 was the last year for a trade deficit. As former Prime Minster Abe right after that made international tourism, or bringing more international tourists to Japan a major part of his plan to grow the economy.

Article:

The travel balance reflects the amount of money foreign visitors spend in Japan versus how much Japanese spend abroad.

"Last year, the impact from the coronavirus on the number of overseas tourists (to Japan) was hardly felt in January before it began to emerge in February. But this year, there have been almost no visitors from the start," a ministry official said.

Primary income, which reflects returns on overseas investments, posted a surplus of 11.4 trillion yen, up 6.6 percent, to log the largest black ink since comparable data became available in 1985, due to an increase in returns on direct overseas investments.

Ideas:

Yes, Abe and the then Japanese government recognized the value of foreign or international tourists coming to Japan as they brought a lot of money into the Japanese economy.

And then, at the time and before the pandemic, all of the tourism related businesses that were created to cater to international tourists, especially those from China.

Before the pandemic, as I traveled to Haneda many times, the lines waiting at the immigration areas were really long. 

But the Japanese immigration waiting area was very smooth and fast, or relatively fast. And I said to myself that Japanese immigration is practicing for when the Tokyo Olympics arrive with the hundreds of thousands of visitors all coming at the same time.

But unfortunately now, all of the those businesses, including all of the hotels, resorts, restaurants, and those in department stores, for example in the Ginza area, who might have worked there because they spoke Chinese and helped the Chinese tourists who came in buses full with their credit cards and cash ready to buy anything, are now mostly likely not working or are assigned to doing something else at the company they are or even were working for.

Its interesting that overseas investments have grown. But one theory or idea is to invest in projects and other types of capital investments when economic conditions are down, and then when economic conditions improve a company is already ahead of the competition who might have waited until economic conditions were better

Article: 

In June alone, the current account surplus increased more than six-fold to 905.1 billion yen from a year earlier, staying in the black for 84 months.

The nation registered a goods trade surplus of 648.5 billion yen, and a services trade deficit of 346.4 billion yen. Primary income logged a surplus of 680.5 billion yen.

Ideas:

While exports alone can't drive an economy, they can, if large enough, can drive or really improve the current account.

But it must be remembered just how much exports and the current account decreased from a year earlier.

But at the same time a six-fold increase is an excellent comeback from the first half of 2020.

The fact that the current account stayed in the black for 84 months is a very good indication just how much in demand that Japan's exports have been.

Again, while exports are a very important part of the economy, they are not the whole economy. It has been estimated that exports only make up about 20 percent of Japan's GPD, while consumer spending makes up about 50 percent of Japan's GDP.

The problem is of course that consumer spending is not what is should be and might not be for the rest of 2021.

Have a nice day and be safe!