Japan Current Account:

 Article Source:https://mainichi.jp/english/articles/20230410/p2g/00m/0bu/008000c

Article:

TOKYO (Kyodo) -- Japan's current account surplus in February shrank 2.3 percent from a year earlier to 2.20 trillion yen ($16.6 billion) due to inflated imports on a weak yen, the Finance Ministry said Monday.

Helped by a slower increase in imports, the current account, one of the widest gauges of international trade, returned to the black after incurring a deficit in January, according to the ministry's preliminary data.

Among key components of the current account, the country reported a goods trade deficit of 604.1 billion yen, as imports expanded 9.8 percent from a year earlier to 8.25 trillion yen on the back of a rise in the value of coal and liquefied natural gas imports.

Ideas:

Japan's current account for years, if not decades, was always positive due to a large number of exports from strong demand for Japanese products such as cars.

The weak yen of course hurts import prices which of course means the current account loses value, which means it could affect the overall money supply and the value of the yen in the future.

Japan is a resource-poor country which of course means it has to import a lot of products, and if the yen and dollar, for example, are not in sync like now import prices could be much higher than normal.

Of course energy product prices are high now which is an import which means the current account will be much less.

Article:

The trade deficit was smaller than the massive 3.18 trillion yen deficit seen in January when Japanese firms curbed China-bound shipments due to the Lunar New Year holidays.

Exports increased 4.5 percent from a year earlier to 7.64 trillion yen, helped by automobile shipments to North America and the Middle East, the ministry's data showed.

While a weak yen swells import costs for resource-scarce Japan, it also adds value through returns on foreign investments made by Japanese firms and overseas profits made by Japanese exporters.

Ideas:

Japan seems to be heavily dependent on both China and the US and maybe too much so and if there are challenges in one country or the other Japanese exporters could suffer.

The challenge of course is finding markets that can compliment or ease the burden if China and or the US markets are less that expected for example if demand for car decreases in one or the other market.

Of course its easier said than done as of course Japanese exporters are always try to improve market share in for example India to offset market lags or decreases in the other big markets.

And yes, as Japanese companies and importers find ways to invest in overseas market, they can improve their investments which brings value to the imports.

Article:

The yen was 15.2 percent weaker in February than a year earlier against the U.S. dollar and 9.0 percent against the euro.

Primary income, which reflects returns on overseas investments, came to a surplus of 3.44 trillion yen, up 18.6 percent, inflated by higher interest rates overseas and the weak yen.

Japan's services trade deficit, which includes cargo shipping and passenger transportation, widened slightly to 220.4 billion yen, due partly to an increase in advertisement fees overseas.

Ideas:

The weaker yen of course against the US dollar means import prices, especially those coming from the US would be even higher which of course means importers might pass-on their increased import prices to the next in the supply chain.

Higher interest rates like lower interest rates can be both a positive and negative depending on the situation and or sector involved.

In this case companies and individuals with overseas investments had an advantage as the US and the EU had higher interest rates due to the central banks in both economies increasing the rates.

Japan's services trade might also include tourism as more tourists from overseas might have visited Japan than Japanese actually visiting other countries which might cause a services trade deficit.

Article:

The travel balance posted a 223.9 billion yen surplus, jumping from 14.0 billion yen a year earlier, boosted by a sharp increase in the number of foreign visitors to Japan after the easing of COVID-19 border restrictions, the data showed.

A travel surplus occurs when the amount of money foreign visitors spend in Japan exceeds what Japanese people spend overseas.

Nearly 1.5 million foreign nationals visited the country in February, while 537,700 Japanese left the country, according to data from the Japan National Tourism Organization.

Ideas:

The Japanese government was right, if not later than expected, in opening the country, as tourism is a big driver for the Japanese economy as tourism can help many sectors in the Japanese economy. 

As the Chinese are now able to visit Japan again, its only going to make things better as the Chinese are now big spenders or everything Japan.

Of course the Fukushima situation and China is going to be  challenge in the future but it should not affect tourism too much.

The challenge now of course, as always, it how to improve the permanent residency situation and improve the Japanese population situation and the birthrate is not what it should be in Japan. But that's for another blog later.

Have a nice day and be safe!