Japan Current Account: Updated April 6, 2024.

 

Japan's current account surplus doubles to 20.63 tril. yen in 2023

Article Source:  https://mainichi.jp/english/articles/20240208/p2g/00m/0bu/018000c

Ideas:

 A country's current account is like a country's bank account, as exports put money into the current account and imports takes money out of the current account.

Japan seems to focus on the current account much more than the US, and maybe because Japan is a smaller geographic area and Japan is more focused on exports than the US, and of course Japan is a resource- poor country and has to import much of what it needs.

A weak yen is both a positive and a negative depending on which side of the equation a company or individual is on. For export companies, and weak yen, gives them more yen, while for importers a weak yen increases the price they have to pay for products they buy overseas.

Auto exports are an economic driver for the Japanese economy, as an economic driver increases economic growth significantly, but at the same time, Japanese companies need to expand their base and not become too dependent on the US and there is always a chance, although slim, that the US economy could slip.

For the time being, maybe oil and energy prices are finally beginning to ease as it seems like they have  been high ever since the pandemic.

And again, as Japan is resource-poor country they have to import much of the oil and gas they need every day, every week, every month, and every year.

The trade deficit seems to be a major focus on the Japanese government, and maybe for good reasons, as exports and imports are major areas of concern for the Japanese economy.

Small geographic countries such as Japan and the Northern European countries are always focused on exporting, as for the most part, at least the Northern European countries, they have small domestic populations and they need to focus on exporting.

For Japan, much of Japan after WW2 was focused on exports as a way to develop the Japanese economy, and as such exports have remained a major economic driver ever since.

Its good that foreign tourists are going to Japan a lot as it increases economic growth for many businesses in Japan. 

But at the same time, many Japanese business became too dependent on foreign tourists and when the pandemic hit, many companies and or course many workers lost their jobs.

Also, many Japanese cities or areas, are beginning to re-think the ideas of having too many tourists and some foreign tourists don't know how to have good manners in Japan and cause problems for the local Japanese population.

Increasing the key interest rate too, has both positive and negative situations. For those in the domestic economy, it might be a negative, as it increases loan borrowing and existing loans.

But at the same time, it might increase the dividends on income for overseas companies and others too.

So, as with all things in economics, there are always positives and negatives related to all actions and activities too.

Whenever I survey the news related to the US economy, there usually is never any news related to the current account, international trade, trade surpluses or trade deficits. 

The US economy is trade deficit economy, meaning they always import more than they export. and of course the reason for that is many global companies want to sell their products in the US.

At the same time, yes, Japan needs a lot of foreign products as its a resource-poor country, it does get it fair share of global products, but for the most part Japan is an export economy, which means it usually has a larger trade surplus compared to a trade deficit.

Have a nice day and be safe!