Japan Current Account: Updated Oct. 8, 2023.

 Article Source: https://mainichi.jp/english/articles/20230608/p2g/00m/0bu/019000c

Article:

TOKYO (Kyodo) -- Japan's current account surplus expanded 76.3 percent from a year earlier to 1.90 trillion yen ($13.6 billion) in April, lifted by a smaller trade deficit amid lower crude oil prices, the Finance Ministry said Thursday.

The current account balance, one of the widest gauges of international trade, remained in the black for the third consecutive month, with the goods trade deficit shrinking 83.5 percent to 113.1 billion yen, according to the ministry's preliminary data.

Ideas:

It has to be remembered that last year, because of the pandemic, imports might have been more than exports which might have caused a trade deficit.

And as the pandemic has since passed maybe international and exports has expanded again.

Also maybe import prices might have decreased to the point that export prices and volume might have finally increased more than import volume or prices.

Trade has always been an import economic indicator for the Japanese economy has many manufacurers export their products globally.

Article:

Imports declined 4.1 percent from a year earlier to 8.34 trillion yen after the price of crude oil dropped 22.6 percent to $83.42 per barrel, the ministry said. It is the first time imports have declined in two years and three months.

Exports grew 2.6 percent to 8.22 trillion yen, led by increased shipments of automobiles and optical instruments, the data showed.

Primary income, which reflects returns on overseas investments, posted a surplus of 3.07 trillion yen, up 3.1 percent, driven by higher interest rates overseas and the weak yen against the U.S. dollar and other currencies.

Ideas:

Most likely crude oil and other energy sources are beginning to decline which is important for Japan as its a energy resource-poor country and needs to import most of its needs.

If we look at the numbers, imports were still higher at 8,34 while exports were 8.22 but that is a good sign that exports are improving which is good for the Japanese economy overall.

Japanese automobiles have always been at the core of Japan key exports and Japanese cars are still in demand globally.

Higher interest rates are not all negative as it provide postives for investors in place that continue to increase their key interest rate.

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The surplus in primary income was a record high for April, according to the ministry.

Japan's services trade deficit, which includes cargo shipping and passenger transportation, narrowed 35.5 percent from a year earlier to 646.5 billion yen thanks to an expanded travel surplus, according to the ministry.

The travel balance surplus jumped more than 11-fold to 294.1 billion yen, boosted by a sharp increase in the number of foreign visitors to Japan following the easing of COVID-19 restrictions, the data showed.

Ideas:

Because of the weak yen and stonger curencies of other countries maybe not as many Japanese were traveling, while the weak yen has been a magnent for internatioal travelers to Japan. 

Japan is heavily dependent, for extra economic growth, on foreign visitors as they bring extra money into the economy. 

Cargo shipping, and the trade services sector, probably saw a large decrease during the pandemic as there were major logistics challenges in logistics and shipping during that time period.

As China has now managed to overcome their pandemic challenges and logistics challenges maybe global trade and global logistics are getting back to some kind of normalcy.

Article:

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

Nearly 2 million foreign nationals visited the country in April, while 560,200 Japanese left the country, according to data from the Japan National Tourism Organization.

Ideas:

Because of the weak Japanese yen compared to the Euro and US dollar maybe many Japanese were reluctant to travel. 

However, the Japanese population at 125 million is of course smaller than the global population so its natural and understandable if Japan has a travel surplus.

Japan, in 2023, might not reach the record level of internationa tourists it saw in 2019 of around 31 million but by 2024 that level should be reached easily, and especially if energy prices and airline tickets decrease. 

Of course China is a big part of tourism in Japan these days so as more and more Chinese travel to Japan that helps as now they are big spenders in Japan.

Have a nice day and be safe!