Japan Current Account:

 Article Source: https://mainichi.jp/english/articles/20230112/p2g/00m/0bu/008000c

Article:

TOKYO (Kyodo) -- Japan posted a 1.8 trillion yen ($14 billion) current account surplus in November, the largest-ever for the month, as a weaker yen helped lift primary income to a record high despite the resource-scarce nation recording its biggest trade deficit on surging imports, government data showed Thursday.

It is the first time in eight months that Japan saw a year-on-year surplus expansion in the current account, one of the widest gauges of international trade, with the November figure up 16.4 percent.

A nearly 54 percent year-on-year jump in primary income, which reflects returns on overseas investments, to 3.72 trillion yen could be a one-off, however.

Ideas:

As Japan is heavily invested in international trade, the current account indicator is very important as a measure trade in Japan with other countries. 

While exports help increase the current account imports actually lower the current account over time.

Overseas investment by companies are a good indication that Japanese companies feel good about the continuing to invest overseas even though some parts to the the global economy are near recession levels.

Regarding the idea that investments are a one-off situation is probably correct at the global economy is not really improving that much.

Article:

Also boosting the current account surplus, the travel surplus saw a roughly 6-fold increase over the year as Japan removed COVID-19 travel restrictions, the Finance Ministry's preliminary data showed.

Comparable data became available in 1985.

The yen's sharp depreciation last year inflated the value of returns on overseas investments made by Japanese firms and import costs of everything from energy to raw materials and food. For resource-scarce Japan, the weaker currency has eroded its national wealth.

Ideas:

Lifting of the travel restrictions is a major plus for the Japanese economy has it brings in more more money into the current account.

The weak yen is definitely eroding Japan's national wealth but after many years of a surplus Japan is probably still in good shape. 

Once the Japanese yen gets back to some kind of normal then the real value of overseas investments can be seen over time.

But as long as the Bank of Japan maintains is ultra-low policy most likely the yen will continue to be low compared to other currencies, which is going to cause import prices to remain high. 

Article:

Japan reported a trade deficit of 1.54 trillion yen, a record for November, after imports grew more than exports in value terms.

Imports surged 33.8 percent from a year earlier to 10.55 trillion yen with crude oil, coal and liquefied natural gas among major contributors. Exports, meanwhile, gained 20.7 percent to 9.01 trillion yen, boosted by cars and machinery for construction and mining.

Crude oil was up 56.9 percent from a year earlier per kiloliter in yen terms. The dollar was at 142.44 yen, about 25 percent higher than in November 2021.

Ideas:

Japan for a long time had run a trade surplus so the last two years of a trade deficit is probably not going to be that big of challenge for Japan's current account over time.

Exports with an increase of 20.7 percent is still good enough for Japan to not feel to challenged as global trade is still have major factor for Japan. 

But yes, the weak yen and imports can be a challenge for Japan especially for the domestic economy overall.

The dollar at 142. 44 yen at 25 percent higher means imports prices could be as much as 25 percent higher than November 2021.

Article:

The weaker yen makes Japan an appealing travel destination for foreign tourists because overseas visitors enjoy increased spending power. While still just a fraction of pre-COVID-19 pandemic numbers, Japan took in 934,500 foreign visitors in November.

The travel balance, which reflects money spent by foreign visitors to Japan minus the amount spent by Japanese residents overseas, came to a 95 billion yen surplus, a sharp increase from 15.2 billion yen a year earlier.

Japan's 166.4 billion yen service trade deficit is smaller than a year earlier.

Ideas:

The weak yen is definitely as major inventive for tourism as tourism brings in more money into the current account which can offset the weak yen and import prices in the domestic economy overall.

The 934,500 tourists is still a long way from the 32 million tourists of 2019. But something is better than nothing. So maybe 2023 will bring even more tourists to Japan.

The travel balance overtime of course will increase as more and more tourists come to Japan in 2023.

Perhaps the Bank of Japan is correct in keeping the yen low or allowing the yen to remain low as a way to get more tourist money into the current account to make up for the deficit caused by higher import prices in the domestic economy.

Have a nice day and be safe!