Japan Current Account:

 Article Source:

https://mainichi.jp/english/articles/20230308/p2g/00m/0bu/004000c

Article:

TOKYO (Kyodo) -- Japan posted a record current account deficit of 1.98 trillion yen ($14 billion) in January, hurt by swelling import costs that caused the resource-poor nation to register its largest-ever trade deficit, the Finance Ministry said Wednesday.

Growth in exports was far slower than that of imports, partly because Japanese firms curbed China-bound shipments due to the Lunar New Year holidays there that came earlier than usual. This translated into a whopping 3.18 trillion yen trade deficit, double the year-earlier figure.

Ideas:

Trade deficits shouldn't be seen as a negative as they are usually just part of the normal business cycle of ups and downs of an economy.

For many years Japan had a trade surplus so there shouldn't be that much concern for a trade deficit even it lasts for a year or two.

Maybe nothing can be done about being a resource-poor country and a country can only use what it has and then has to import the rest of what it needs and or maybe some countries are better at producing and making some products meaning they have an absolute advantage in producing what they need.

At the same time the slowdown in China is just business activity as the lunar new year cause as cease in business in Japan.

Article:

The current account, one of the widest gauges of international trade, fell into the red for the first time since October, despite a record primary income surplus on higher foreign investment returns.

Comparable data became available in 1985, except for trade figures that date back only to 1996. Japan's largest previous current account deficit was in 2014, at 1.46 trillion yen.

Ideas:

If the current account was OK before October and was in trade surplus situation that means the trade deficit has not been that long and again Japan shouldn't worry about a few months of a trade deficit and trade deficits can follow the business cycle of normal ups and downs of business.

It seems that around 2014 was the beginning of the Abenomics situation as a way to improve the economy and also the first real wave of tourism increases into Japan which means a lot of money was brought into Japan buy tourism and tourists.

Article:

Imports jumped 22.3 percent to 10 trillion yen, boosted by a rise in the value of coal and liquefied natural gas imports. Exports rose 3.4 percent to 6.82 trillion yen.

Higher costs of imported energy, amplified by the yen's depreciation against the U.S. dollar and other currencies, cut into Japan's national wealth in recent months, at a time when exports have benefited from a recovery in overseas demand as the global economy recovers from the fallout from the COVID-19 pandemic.

Ideas:

An increase in imports should not be seen as a negative as whatever is brought into the Japanese economy is going to be used and bought by Japanese companies and Japanese consumers. 

Yes money might be going out for the imports but at the same time money is being used for the purchase energy, food product and other products that companies and consumers need in Japan.

The weak yen is also of course good for exporters as they can get a higher price for their Japanese products in the global market. 

As the global market begins to recover, slowly from the pandemic, more and more Japanese exporters will see increases in sales and revenue over time.

Article:

Overseas bond yields have been rising on expectations that major central banks, including the U.S. Federal Reserve, will continue to raise interest rates, though concerns have grown that aggressive hikes will slow economic growth.

Primary income came to a surplus of 2.29 trillion yen, reflecting higher interest income amid rising overseas bond yields, the ministry data showed.

Japan reported a smaller service trade deficit of 758.4 billion yen than a year earlier, due to a roughly 14-fold increase in the travel surplus as the number of foreign visitors continued to recover.

Ideas:

There are always positive and negatives in a interest rate hike as some might benefit from it and some might not benefits from it. 

Yes, there is always the possibility of a slower economic growth as maybe some companies will not borrow, some companies might not invest new products and services, and some consumers might not borrow and or buy as much as before.

A trade service deficit might be a positive as more tourists come to Japan and spend their money due to a weak yen which of course means Japanese tourists going to other countries might have to the challenge of a strong yen related to the US dollar and have to pay more.

But overall, for the good of the Japanese economy, at this time a weak yen is a boom for tourism and foreign tourists can take advantage of the weak yen and can spend more in Japan which means, or might mean, despite the weak yen causing imports price to increase products for Japanese consumers and companies the weak yen offsets the negatives with a lot of tourists using their money in Japan.

Have a nice day and be safe!