Japan Trade Deficit in August: Updated September 24, 2024.

 

Japan logs 695.3 bil. yen trade deficit in Aug. on weak yen

Article Source:  https://mainichi.jp/english/articles/20240918/p2g/00m/0bu/014000c

Ideas:

Japan likes to think its an exporter oriented country, and record exports show it, but the trade deficit overshadows its exported oriented focus, as the weak yen as continued keep import prices higher than normal.

Not only does the weak yen affect import prices and importers, but the overall domestic economy, as businesses and Japanese households feel and see the increase in prices every month.

Not say anything bad about the Bank of Japan, but they seem to be taking a hands off approach to the weak yen and the inflation situation, and just letting the Japanese economy with inflation run its course.

Japan, for a while, was really not in the game related to semiconductors chips but now it trying to get back into the game and trying to improve its market share as Taiwan and South Korea, have most of the market share in semiconductors.

The shrinking of the trade balance is a good sign that the Japanese economy might be improving moderately, using the term the Bank of Japan likes to use.

But there is no room for optimism, maybe a little, as the Japanese economy has been stagnant for a long time, with a lot of ups and downs, but still despite the ups and downs, a very staple economy, as the ups and downs might be 1 percent up and 1 percent down, but not much beyond that.

There are positives and negatives related to a weak yen, as it helps exporters and overseas profits but increases import prices too.

The weak yen is a boom for foreign tourists traveling to Japan, as they have more buying power or purchasing power, and can buy more things in Japan, which then is good for the Japanese domestic economy, and Japanese hotels and other businesses gain from tourists buying a lot.

So the Bank of Japan needs to balance out what is best for the Japanese economy, with  Japanese exporters and overseas investors seeing the profits increase, but at the same time importers lose out with increased higher import prices, and the overall Japanese economy, losing out with the weak Japanese yen.

The Japanese trade deficit also affects the Japanese current account, which is like a country's bank account, as the trade deficit reduces the amount of the current account. 

But exports and overseas Japanese investors increase the Japanese current account, so the again, the Bank of Japan needs to be careful or find a good balance for all activities related to the Japanese economy.

The global economy always goes through business cycles, like any economy, as right now, it might be in a slight downward cycle but as always it will bounce back and move in the right direction.

Its good that Japan has a trade surplus with the US, but at the same time it needs to keep focusing on other markets and not just the US. But of course, if trade continues to be positive with the US, why not put more resources into trade with the US, especially if trade with China is not where it should be at this time.

And again even though trade with the US was only 1.2 percent that is still a good number considering the volume of trade between the US and Japan.

The US economy might be the strongest in the world at this time, but that doesn't mean Japan should neglect or focus about its other trade partners and especially Japan should continue to trade with China, as its a large economy and eventually it will turn around.

Again, continue to trade/export to China, as China is going through some internal economic challenges at this time, and eventually they will sort things out.

China is just too big an economy to ignore and Japanese companies, as much as possible, should continue to do business in Japan, even if they are losing money, at the present time, as in the future and now, the Chinese middle class it just too large to ignore so they have a lot of money to spend.

That's to say if a Japanese economy is losing market share to Chinese companies and they just can't continue on, then its good to exit the Chinese market.

Asia, including South Korea, is both positive and negative, as Asian economies are a mixed bag at this time time, but, again, Japan should continue do to business with these economies has they have large middle classes with a lot of money to spend.

The EU is a different story as it seems to have it own stagnation challenges and maybe the Ukraine war situation is affecting the EU and or demand for Japanese products its just not there at this time.

Have a nice day!