Record exports trim Japan's FY 2023 trade deficit to 5.89 tril. yen
Ideas:
Even though there are 120 million Japanese in the domestic economy, and the 4th largest economy in the world, Japan seems to be mostly an export oriented economy.
Japan's trade deficit has been larger than usual due to the weak Japanese yen, which increases import prices and also because China has been having internal economic structural challenges which has affected trade to and from China.
The US economy and demand seems to be the one bright spot in the global economy at the present time, which means Japanese export companies seeing huge increases in demand from the US.
Japanese exports increase the Japanese current account but Japanese imports, decrease the Japanese current account, which is like a country's bank account.
It must be remembered, are the numbers being listed are they volume numbers or export/import value numbers, as value numbers can inflate both import and exports, but so can volume numbers, as it really doesn't say which.
But anyway, the recent trend, which is good, shows Japan's export companies are continuing to do very well, and of course maybe demand from the US economy has a lot to do with that.
The Japanese car industry, which is made up of 8 or 9 car companies, and some being subsidiaries of the larger car companies, seems to be a major export driver for the Japanese economy.
An economic driver is any industry that significantly increases economic growth and the Japanese car industry does just that.
As Japan is resource-poor country, it has to import much of what it needs, as a such is subject to global price trends along with the Japanese yen, being weak, causes import prices to increase.
But it seems, that maybe import prices, at least for energy commodities are finally beginning to decrease.
The Japanese economy seems to be falling into the same trap as South Korea is in but as Japan is the much larger and older economy, at least since WW2, as the trap seems to be only focusing on a few exports as economic drivers and for Japan of course its cars, but for South Korea, its seems to be semiconductor chips.
As cars in Japan go, so goes the Japanese economy, meaning when its good its, very good, but if global trade and or the US demand drops off Japan could be in trouble.
Japan needs to expand its global presence beyond just Japanese cars, like it did in the 70's and 80's when Japanese products flooded global markets.
Not to sound negative about the article, but the US, recently, has not indicated its going to increase rate hikes and inflation in the US seems to be leveling off and the need for rate hikes seem to have passed.
China, while not strong now, seems to be have reached bottom, which could be good as now it only can get better and economic conditions will begin to improve.
The situation is the middle east is always a challenge as global factors can easily affect business and global trade.
Japan needs to have some trade agreements with oil/energy producing countries as a way to offset increases and deceases in energy prices that affect Japan, as resource-poor country, which requires it to import most of the energy it needs.
The Bank of Japan, if its going to intervene in the currency market, has to be very careful and not look like its a currency manipulator, as the US is watching very carefully to see what Japan is going to do due about the weak Japanese yen.
The US dollar at 6.5 percent higher doesn't seem that much, but if it been increasing every month the past few years, it could be even more.
A weak Japanese yen is good for Japanese export companies but not so good for Japanese import companies, as it increases imports into Japan, which mean importers will pass-on their costs to the next in the supply chain, including the final customer.
Again, trade with the US, might be the one bright spot for the Japanese economy, as China, while a strong trade partner with Japan, has not been as strong as it was before the pandemic.
And again, if Japan only relies on the US for trade, it could be a challenge if demand for Japanese products decreases too much, like it has related to China.
Are the numbers being listed again, are they volume numbers or value numbers, as the weak Japanese yen, inflates both numbers.
It seems both imports and exports to and from China are decreasing for any number of reasons, and perhaps there are still some logistics challenges that have existed since the pandemic.
But one area that probably has not improved much is the ban on Japanese seafood to China as the Chinese government might still have a ban from seafood and the Fukushima region where the earthquake happened, which affected the nuclear site in the region.
But the Chinese economy seems to be going to a period of transition, and its probably not back to full strength just yet.
Japan needs to focus as much as it can on trade with the rest of Asia and not just China, and certainly not just the US, as the rest of Asia, including South Korea, is a large economic area that should not be ignored as the rest of Asia is large economic zone with a lot of potential customers.
The European Union is a large area, but of course has had challenges recently including the Ukraine situation.
But overall, including Germany, the EU has been in a stagnant situation for a long time and it does look to improve anytime soon.
But again, Japan should not give up on the EU and continue to import and export as much as possible as there are a lot of potential customers in the EU.
Have a good day and be safe!
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