Japan Current Account Increase: Update October 15, 2024

Japan logs record current account surplus of 3.80 tril. yen in Aug.

Article Source: https://mainichi.jp/english/articles/20241008/p2g/00m/0bu/005000c

Ideas:

The weak Japanese yen is a positive for some activities in Japan such as foreign investments and exports, but its also a negative for the Japanese domestic economy, which is a resource-poor economy, which means it has to import much of what is needs.

The current account is like a country's bank account and foreign investments and exports increase the current account while imports reduce the current account.

The Bank of Japan might not be in a hurry to increase the weak yen and its just too good for many now, and also foreign tourists who have more purchasing power buying things in Japan.

Of course as always there are some positives and some negatives too such as sometimes imports exceed exports such as when pharmaceuticals and oil increases a lot.

Japan can't rely on exports only as there are always going to be periods of less than expected demand and maybe demand for imports with some products increases a lot.

But the fact that the current account has expanded for 19 straight months is a good thing, as the current account helps pay for many things in the Japanese economy.

The travel surplus is very important for the Japanese economy, as Japan is relying heavily on foreign tourists and their spending to lift Japan out of the still pandemic hole that was created during the pandemic, as many services business went bankrupt and many still have not fully recovered.

At the same time the Japanese economy has been in a stagnant situation for a very long time, and foreign tourists help the domestic economy recover, but of course it can't completely change the Japanese economy as other factors need to improve too.

The weak yen might be a negative for Japanese travelers as they have to experience a stronger yen overseas which means they have less to spend compared to foreign travelers who travel to Japan who have the advantage of being able to spend more.

So the Bank of Japan has to balance out the weak yen for exports and foreign investments but at the same time try to find a way to help the domestic economy and imports as again, Japan is a resource-poor country and needs to import much of what it needs and of course is subject to the weak yen and higher import prices.

Have a nice day!