Japan Current Account: Updated Feb. 17, 2025.

 

Japan logs record 29 trillion yen current account surplus in 2024

Article Source:  https://mainichi.jp/english/articles/20250210/p2g/00m/0bu/008000c

Commentary:
Maybe Japan keeps track of its current account a lot and seems to keep the media informed about it but there is rarely anything in the US media about the US current account.

That might be because Japan is heavily focused on exports and the need to have exports be and economic driver for the Japanese economy such as Japanese cars and recently foreign tourism which county as an export item too.

As the Japanese yen if very weak now it is positive for exporters, Japanese overseas investors and foreigner coming to Japan too.

Japan has become more dependent on exports, foreign direct investments, and foreign travelers more and more as its domestic economy just can't seem to help with economic growth.

The Bank of Japan, while suggesting the weak Japanese yen is causing havoc with importers and the domestic economy, it can't ignore the positives of the weak Japanese yen, and how its also helping the Japanese economy.

It seems Japan has become very dependent on any export that can help the economy has overall not much as worked or helped the Japanese economy but exports, foreign investments and foreign travelers to Japan.

Goods trade is always subject to consumer trends and consumer demand so it not probable that goods trade is always going to be positive each quarter or each year.

At the present time the global economy is experiencing a boom in demand for semiconductor-making equipment and the trend is only going to be get stronger.

Demand for Japanese cars is always strong or at leas very good, but that could easily change in the future if the US administration puts a tariff on products coming from overseas as it could increase prices and demand could be less than expected.

Japan is a resource-poor country which means it has to import much of what it needs and its subject to global price changes and the weak yen which inflates the prices of imported good in Japan.

It seems that at this time foreign tourists are leading the growth of the Japanese economy which makes foreign tourist spending an economic driver for the Japanese economy.

An economic driver is anything that significantly improves economic growth such as the exporting of Japanese cars globally and now foreign tourist spending in Japan.

Because the Japanese yen is very weak now its good for Japanese travelers to go to Europe or the US because of the EU Euro and US dollar are just too strong and Japanese travelers lost spending power, which means the yen buys less in the EU or the US.

If not now, it has been suggested, there might be the challenge of over-tourism in Japan is some areas such as Osaka and Kyoto which might have problems and need to impose a travel tax or something to alleviate the trash which foreigners leave and also the overcrowding at popular spots in Japan.

Have a nice day!

Japan Current Account: Updated January 16, 2025.

 

Japan's current account surplus jumps 54.5% in Nov. as trade rebounds

Article Source:  https://mainichi.jp/english/articles/20250114/p2g/00m/0bu/006000c

Ideas:

Because Japan manufactures a lot of goods related to trade, Japan seems to always be concerned about its current account balance. Usually small geographic countries like Japan and the Northern European countries focus a lot on trade and exporting.

A countries current account is like a country's bank account as exports bring money into the the account while imports take money out of the account.

The current account, if used wisely can help Japan with its debt to GDP ratio which at the moment is the highest among OECD countries. 

Even though there was a record surplus Japan still has to make up for the losses from the previous years, but its a good start to having a real trade surplus in the current account.

As global oil prices continue to decrease that will be a good situation for Japan, as Japan is a resource poor country and has to import much of what it needs and then there is the Japanese yen, which at the moment is weak, which means it increases the price of imports to Japan.

Chip making equipment is now at an all time high and Japan is smart to invest in Japan making along with producing chips themselves but at the moment they are way behind Taiwan and South Korea in producing chips.

Japan has more than just the goods trade to think about for the current account as there is also overseas production plants which make products overseas and then there is Japanese investments related to dividends and interest earnings which help the current account in Japan.

And as the same time there is foreign tourists who go to Japan and spend a lot due to the weak Japanese yen, which puts a lot of money into the Japanese economy with hotels, restaurants, shopping at stores, and then tourist areas too.

An idea that maybe the Bank of Japan has been thinking about it to keep the Japanese yen relatively weak as it bring in record numbers of foreign tourists, which helps significantly the somewhat stagnant Japanese economy.

Its not a surprise that the trade balance was a surplus as the weak Japanese yen helps foreign tourists but hurts Japanese tourists who want to travel overseas especially to the US and the EU as those currencies are strong compared to the Japanese yen.

There has been talk that the city of Kyoto, a major tourist area for foreign tourists, is struggling with over-tourism now and might impost a tourist tax on hotel stays of maybe 10,000 yen per night or $100 dollars per visit as a way to reduce the waste and other littering related to too many tourists in Kyoto.

Of course what Japan doesn't want is to have tourists thinking that Japan is not foreigner friendly as they need the money that foreign tourists spend in Japan to help the Japanese economy.

Have a nice day!