Japan Current Account:

 Article Source:   https://mainichi.jp/english/articles/20220408/p2g/00m/0bu/025000c

Article:

TOKYO (Kyodo) -- Japan logged a current account surplus of 1.6 trillion yen ($13.2 billion) in February, down 42.5 percent from the previous year due to a surge in energy import costs, the Finance Ministry said Tuesday.

The country's current account balance, one of the widest gauges of international trade, posted the first black ink in three months helped by a smaller goods trade deficit than in January, according to a preliminary report released by the Finance Ministry.

Imports grew 34.2 percent to 7.5 trillion yen for the 13th consecutive month of increase, with costs for crude oil soaring 93.2 percent and liquefied natural gas jumping 65.3 percent.

Ideas:

Japan's current account situation is a prime example of how resource deficient Japan is in having to import most of what it needs, from raw materials to energy, to food stuffs.

When the yen begins to get too weak it can wreck havic on Japan's current account balance as now Japanese companies are having to pay too much for whatever they need.

A weak yen takes money out of the current acount while it might bring money into the account because exporters can get even more.

But as the services sector might make up as much as 70 percent of Japan's GDP that means there might be a lot services type businesses having to pay more for whatever they need from energy resources to raw material costs.

Article:

Exports expanded 19.8 percent to 7.3 trillion yen, up for the 12th straight month, led by brisk shipments of iron and steel, fuels such as diesel oil, and cars.

The increased imports translated into a goods trade deficit of 176.8 billion yen, following a 1.6 trillion yen deficit in January.

The trade deficit narrowed from the previous month partly due to a smaller deficit with China, a ministry official said. Before and during the Chinese New Year holiday, Tokyo tends to curb exports to the country but increase shipments when the vacation is over.

Ideas:

Exports might have increased but are they enough to overcome the increases in energy costs and raw material costs that many importers now to pay for.

Is the increase in imports due to an increase in actual volume or is just an increase in value because of the weak yen. 

So even though exports increase it appears, if reading correctly it was not enough has there was still a trade deficit meaning more imports than exports. 

Exports bring more money into the Japanease current account while imports reduce the current account.

Ignoring the potential political noise trade between China and Japan hopefully will begin to get back to some kind of normal or new normal as the pandemic situation in China begins to subside, as some parts of China including major shipping ports were closed or shutdown recently.

Article:

Meanwhile, the services trade balance, which includes cargo shipping and passenger transportation, registered a 203.5 billion yen deficit. It deteriorated from a 43.2 billion yen deficit a year ago as Japanese companies paid more for online advertising to foreign companies, the official said.

The travel balance posted a 14.3 billion yen surplus, smaller than 17.2 billion yen logged in the previous year, as 16,700 foreigners visited Japan while 46,900 Japanese left the country in the reporting month amid continued travel restrictions due to the COVID-19 pandemic.

Primary income, which reflects returns on overseas investments, posted a surplus of 2.3 trillion yen, down 278.6 billion yen from a year earlier.

Ideas:

Not to be negative or second guess the Japanease government and its travel restriction policies but it appeaer that Japan is losing a lot of money by not fully opening to international tourism which can bring a lot of money into the country.

As resported in other sources, some 31 million international tourists visited Japan in 2019. So that is a lot of money being used and being spent in the Japaneae economy.

And with a weak yen that means tourists can spend a lot more in Japan. 

If Japan is really concerned about its debt to GDP ratio this is very good way to begin to reduce the debt ratio.

Bring more tourists into the country and let them spend freely.

Unfortunately, tourist groups are not going to be enough to help the economy. Unleash the potential that is out there and let tourists into the country. 

Even a 20,000 limit quota is not going to be enough. Even Japanese business leaders and organizations are saying open the economy now before its too late.

The pandemic is winding down and has been for a long time. Japan needs to join the rest of the world and let the rest of the world join Japan again.

Have a nice day and be safe!