Japan's Current Account: Updated April 12, 2024.

 

Japan current account surplus up to 2.64 tril. yen in February

Article Source:  https://mainichi.jp/english/articles/20240408/p2g/00m/0bu/006000c

Ideas:

Japan might be one of the few countries that focuses on its current account, as most countries don't seem to focus on it that much. But as Japan is a export focused economy, the the current account is important for the Japanese economy.

A current account surplus or trade surplus is like an economies bank account as exports bring money into the current account and imports takes money out of the current account.

Japanese auto shipments are a key economic driver of the Japanese economy. An economic drivers is any economic activity that consistently and significantly increases economic growth.

Most likely energy imports were/are beginning to finally decrease in value after months and years of high energy prices.

The US Federal Reserve, has not reduced its high key interest rate yet, but its still high enough for significant investment returns for investors.

In the coming month the US key rate will be reduced which then means there will be returns on overseas investments, in the US for Japanese investors.

Most likely, for whatever reason, maybe there are not as many direct investors into Japan as there are Japanese investors to the US, China, the EU and so on

As more foreign tourists come to Japan, the Bank of Japan needs to be very careful about what its going to do with its key rate, which, at the present time, is keeping the Japanese yen weak, which is a major incentive for foreign tourists to come to Japan, as they have more purchasing power, which means they can buy more in Japan.

If the Bank of Japan does begin to significantly increase the key rate, and the Japan key rate comes more in line with the US Key rate, the Japanese yen might begin to get stronger, which could be a major challenge for foreign tourists who want to come to Japan and spend a lot.

But that might not happen for a year or more as the BOJ most likely will take very small steps increasing the key rate, as the BOJ doesn't want to cause any harm in the Japanese economy including causing foreign tourists from coming to Japan and spending a lot when they do come.

The Japanese population is around 125 million people, but of course not all are going to travel overseas, as the strong US dollar or strong Euro might persuade many Japanese not to travel at this time.

The Bank of Japan, most likely, is aware of the travel surplus that brings money into the Japanese economy and supports many service types businesses such as hotels and restaurants. 

Its a major significant driver for the Japanese economy, and the BOJ needs to be sure that it doesn't increase its key rate too much, which means the Japanese yen, gets stronger, which then means foreign tourists have less purchasing power, and don't spend as much in Japan when the do come.

Have nice day and be safe!