Japan Current Account: Updated July 13, 2024.

 

Record primary income lifts Japan's May surplus to $18 billion

Article Source:  https://mainichi.jp/english/articles/20240708/p2g/00m/0bu/010000c

Ideas:

A country's current account is like a bank account as some economic activities put money into the current account and some take money out of the current account.

Obviously foreign investments are maybe another important economic driver for the Japanese economy, as it looks like they are very strong recently.

Primary income looks like very good and has been recently too, as it seems the Japanese economy just doesn't want to rely on exports and or the Japanese car industry to increase the current account.

The weak Japanese yen, and imports are a negative for the Japanese economy, as import prices remain high which affects not only Japanese importer but Japanese households too, as importers will pass-on their costs to the next in the supply chain, including the final retail customer.

It seems the Bank of Japan is doing a balancing act right now, as it tries to keep the Japanese yen from getting too weak, but at the same time keeping it weak for Japanese exporters and to keep foreign tourists coming to Japan, and again, not too weak that its going to hurt the Japanese economy too much.

Of course the Bank of Japan might be getting a lot of heat related to the weak Japanese yen, and not making it stronger for the good of the domestic economy and importers.

The US Federal Reserve, has not increased it rate for some time as inflation in the US appears to be under control, and they have suggested they might reduce the rate sometime this summer.

A weak yen might be a positive, but it must be remembered that Japanese exporters are also part of the Japanese domestic economy and they might be subject to import prices, for raw materials and the weak Japanese yen, which inflates import prices.

Foreign tourists might be considered another economic driver for the Japanese economy, as the weak Japanese yen, allows them to spend more in the Japanese economy, which many service type companies can benefit from.

A recent article has suggested that even though some Japanese are complaining that maybe there are not too many foreign tourists in Japan, the article has suggested that Japan is not even near the foreign tourism limit and many European countries get far more foreign tourists than Japan. The article even suggested that Japan has double or triple the number.

Its logical that more Japanese are not traveling overseas as the weak Japanese yen, makes it very hard for them and the US dollar and the Euro is very strong against the Japanese yen, at this time.

Time will tell, again, if Japan feel sit needs even more foreign tourists and again, as it might be a strong economic driver for the Japanese economy, Japan wants even more foreign tourists, even though some in Japan are not happy about the behavior or some foreign tourists, who throw trash on the ground, do things that the Japanese would not do, and some have bad manners in Japan.

Have a nice day and be safe!