Japan Trade Deficit: Update April 8, 2024.

 

Japan trade deficit halves to $63 billion in 2023 on record exports

Article Source:  https://mainichi.jp/english/articles/20240124/p2g/00m/0bu/010000c

Ideas:
A combination of increased exports, weak Japanese yen, while maybe energy imports value or prices decreased helped the Japanese trade deficit to decrease.

Japan, and maybe some others are a few countries that seem to be focused on the trade deficit as in the US its not that big a deal.

Auto exports are a key economic driver for the Japanese economy, as an economic driver is any economic activity that increases economic growth.

China is probably still having internal economic challenges and it might take some time for China to workout its current challenges.

Even though China had only 17.76 trillion yen in exports that is still a relatively strong amount, so Japanese companies, overall, don't need to worry about a slight drop in exports to China.

Japan has always been a resource-poor country and needs to continue to imports much of what it needs. As a result, any global surge in energy or material prices, seems to affect Japan a lot and then add in the weak Japanese yen, and import prices increase.

But for exports, a  weak yen increases the profits of exports companies and reduces the trade deficit, which is like a country's bank account.

Even though the Japanese economy might have been in the red for the third straight year, due to high energy and materials costs, the Japanese economy most likely still have a huge bank account and is not going to run out of money.

The US economy, at this time, seems to be the one bright spot in the global economy and it keeps growing. The US has not increased the key rate lately and there is talk of the US lowering the key rate a few times in 2024.

Most likely imports and exports are not volume but value calculations which might be a little different than volume levels, but whether volume or value the record Japanese exports is good for the Japanese economy overall.

Even though Japan has a population of 125 million people. which is a relatively large domestic economic base, Japan is focused on exports as being key a economic driver to grow the economy.

Of course maybe even at 125 million, Japanese companies are unable to grow as they need to focus on the global economy and especially China and the US.

The US, for the most part, seems to be trade deficit economy, as many companies, globally want to sell their products in the US.

The Japanese economy seems to be the opposite and they seem to be a trade surplus economy and always focuses trade surpluses and trade deficits.

Export growth in Japan will continue as a weak yen is good for Japanese companies gives them more profits compared to a strong yen which reduces the profits of Japanese export companies.

China maybe continue to have internal challenges and might be going through a transition period and, again, might need to some time to work out its internal economic challenges.

But from the latest data at 17.76 trillion yen exports to China, Japanese companies don't need to worry too much about China.

The Japanese government needs to find ways to reduce imports costs such as maybe some trade agreements with energy producing countries that can lower the cost of import prices to Japan.

Otherwise, the Japanese economy will continue to have high import prices, as maybe the weak yen will be around for some time in the near future.

Again, Japan is trade focused trade surplus economy, while the US is trade deficit economy, as many global companies want to sell their products in the US. The same can't be said for the Japanese economy, and its not so much about global companies wanting to sell their products in Japan, as its more about Japanese consumers and what they want and need.

The US economy, with its increased demand for Japanese cars, is a good indication the US economy is growing again. If there are any signs of inflation or stagnation or a recession, they are long gone as the US economy seems to be running on all cylinders now.

And that is good for Japan and its export focused companies as they can continue to export a lot despite a slowdown in China.

But of course Japanese companies will continue to focus on China, as its still a major export destination for Japanese export companies.

Japan's trade deficit with Asia might have shrank, but that doesn't mean Japan export companies should be like regular companies and leave a market just because they aren't meeting sales or profit projections.

Asia, overall, is still important for Japan and they should continue to invest in the many Asian markets and continue to do business in them along with continuing to exports to all of the countries.

The European Union is a different situation. Its seems like the European Union, ever since the BREXIT situation has never been the same and maybe take even more time to get back to what it once was.

But again, strong exports related to Japanese cars is again the main driver for the Japanese economy and Japanese export companies.

Have a nice day and be safe!