Japan Current Account: Updated Oct. 10, 2025.

Japan current account surplus down 5% in Aug. on lower investment returns

Article source: https://mainichi.jp/english/articles/20251008/p2g/00m/0bu/012000c

Ideas

Current account information is rarely published in most newspapers in the US but it seems to be in the news in Japan a lot as Japan is a major export economy and the current account is very important for the Japanese economy.

An economies current account is like a country's bank account as exports put money into the account and imports take money out of the account.

A 4.8 percent decrease in the current might not be much or it might be a lot depending on how a country uses its current account. If the current account is used for government funding then it might a major decrease.

But as the article suggests Japan's current account situation is still in good shape because usually exports are more than imports for Japan and as such more yen is going into the account that leaving the account.

There are always going to be months of up and months of down related to export increasing or decreasing and foreign investments too increasing or decreasing each month.

Again, there are always going to be periods of good returns with primary income and periods of less than good returns and primary income. 

The tariff situation might have had something to do with less primary income as the Japanese auto sector in the US might have seen reduction in profits or sales.

And then there is the idea that August is usually one of the slowest months in the US and the European Union as its still a major vacation period in both places.

Japan is still a major good trade economy as exports are very important for Japan and of course cars are the major export along with car parts products.

And of course Japan exports many other product globally to many different countries these days.

Japan also imports a lot of crude oil, as Japan is a resource-poor country which means it has to import much of what it needs and as such what happens with the Japanese yen can play havoc with import into Japan. 

For example as the Japanese currency is weak compared to the Euro and the US dollar it causes imports to be more expensive in Japan. 

A decrease of 0.4 percent is better than expected as the tariff situation was expected to decrease exports even more.

The services trade deficit can be attributed to the record number of foreign tourists entering Japan as maybe the weak Japanese yen has been a motivating factor to travel to Japan as the weak yen gives foreign tourist more purchasing power which means they can spend more.

Japanese tourists wanting to travel abroad face a strong Japanese yen which means they have less purchasing power in many countries around the world.

Back around 2010 the Japanese government began to liberalize tourism as a major industry, and increased the number of countries that could travel to Japan without a visa and could stay for up to 3 months. 

The motivation behind the liberalizing of tourism was to improve the Japanese economy as the economy had become somewhat stagnant and needed some kind of stimulus from the outside.

As such foreign tourism in Japan might be close to being considered a major driver of the Japanese economy, but it still has a long way to go compared to foreign tourists in Spain or France.

Have a nice day!