Japan Current Account: Updated August 26, 2024.

 

Japan logs 12.68 tril. yen current account surplus in 1st half

Article Source:  https://mainichi.jp/english/articles/20240808/p2g/00m/0bu/018000c

Ideas:

Japan's current account might be looking up/improving, but not so much for the domestic economy and inflation is still high in Japan.

The Japanese domestic economy has a long way to go to start growing again, as its been stuck or stagnant for a very long time.

Every time something improves related to the Japanese economy, something else appears to be negative and the Japanese economy can't seem to get all things positive at one time.

A country's current account is like a country's bank account as exports and dividends improve the current account but imports decrease the current account.

Exports, for the most part, are an important economic driver for the Japanese economy. An economic driver is anything that significant helps the economy grow.

Also among exports, Japanese cars are the most important export, and as the US economy is still doing good demand for Japanese cars are still strong, but then so are most foreign cars in the US.

Despite so-called fears the US economy is not headed for a recession and is still the strongest economy in the world at this time.

Japan has always been resource-scarce country but has been able to get though it for all these years, but this time, since the pandemic the weak Japanese yen has been a constant challenge for the Japanese domestic economy.

But at the same time, there are some positives related to the weak yen, as it increase investments from overseas, it boost foreign tourism, as foreign tourist have more purchasing power, and of course it boost Japanese exports who sell the products overseas.

And then there is the interest rate differential between the US key rate and the Japanese key rate, which is a main reason for the weak Japanese yen.

Foreign visitors or tourists have become an important resource for keeping the Japanese economy afloat, as the normal domestic economy seems to be stuck at this time, despite the wage increases in April.

Japanese citizens, at this time, probably are not too keen on traveling overseas, as the weak Japanese yen is actually strong for Japanese citizens, which means they have less purchasing power in the US or in the EU.

Even though Japanese current account has been improving, Japanese debt to GDP ratio is still among the highest among advanced economies.

There seems like there is two economies related to Japan, the domestic economy and then the export economy, or two parts of the same economy. 

The domestic part of the economy seems to be stuck or stagnant yet the export and current account part of the economy seems to be doing much better.

Its kind of like the Japanese stock market, which also is doing very good, but seems to be not really a part of the real economy or the domestic economy, as most Japanese households don't see any benefits from exports or the stock market.

Its seems like sometimes, the Bank of Japan is mostly focused on exports and making sure the Japanese yen remains weak, even though they said something different, as the weak yen boosts exports earnings along with improving the Japanese current account.

Have a nice day and be safe!