Japan's Current Account: Updated Aug. 24, 2025.

Japan's current account surplus grows 9% in 1st half of 2025

Article source:  https://mainichi.jp/english/articles/20250808/p2g/00m/0bu/026000c

Ideas

A surplus puts money into Japan's current account while a deficit reduces money in the current account.

Another way is exports put money into the current account while imports take money out of the current account.

Japan seems to be very dependent on increasing its current account as exports seem like its a major economic driver for the Japanese economy.

It should be remembered that the Japanese yen might have been weak which increases the value of exports along with increasing the value of foreign investments.

At the same time Japan companies, as a way to avoid the US tariff, might have increased exports before the tariffs took effect.

Japan for a long time had become less competitive related to semiconductors as Taiwan and South Korea were the market leaders related to semiconductors, but now Japan seems to be back in the game.

Japanese cars are definitely an economic driver which significantly helps an economy grow, but the problem is Japan, at the present time, has few economic drivers to help grow the economy.

It's possible the value of imports, due to the weak Japanese yen, might have increased, while of course the value of new products might have increased at the same time, as inflation, globally, keeps increasing.

And to be sure, at this time the impact of the tariffs might not have effected Japanese imports into the US just yet.

The weak Japanese yen might have increased the value of dividends along with finance, insurance, and telecommunications. Its not so much the volume increased but the value of the products increased.

It must be remembered there is a difference between the value of product and the volume of a products which sometimes gets confused.

While foreign travelers who spend a lot in Japan might be considered an economic driver. The number of foreign visitors, while at record levels, is still not high enough to be considered an economic driver just yet, as impact on the Japanese economy is improving its not enough to significantly effect the overall economy.

At the same time of course not as many Japanese traveled overseas as the weak Japanese yen, for Japanese travelers becomes a strong currency which reduces a person's purchasing power in another country.

Again, while a surplus in the travel balance is good and helps the Japanese economy its no where near where Spain and France are yet which are the global leaders in foreign travelers entering their respective countries.

Japan has known for a long time that foreigners coming to Japan and spending a lot helps the Japanese economy so they have reduced visa restrictions for many in other countries now.

But the real challenge is opening the flood gates and letting more foreigners into the country to work which will greatly improve the Japanese economy, but Japan is a little hesitant at this time to open the gate too much.

Have a nice day!