Japan’s current account surplus stood at 8.01 trillion yen ($56 billion) in the first half of 2023, government data showed on Tuesday, up 11.1% from a year earlier, as a smaller trade deficit and a weak yen led to record returns on foreign investment .
The improvement comes after the resource-scarce country posted its first trade surplus in nearly two years, with the current account surplus roughly tripling in June from a year earlier to 1.51 trillion yen.
The current account balance is one of the broadest indicators of international trade.
While exports have recovered as COVID-19-related supply disruptions ease, soaring import costs for energy, raw materials and other goods have pushed Japan deep into the red.
Japan’s goods trade deficit narrowed 8.3 percent to 5.18 trillion yen in the January-June period, as import growth slowed, while higher car shipments boosted overall exports.
Imports rose 0.9 percent to 52.58 trillion yen, while exports rose 2.0 percent to 47.40 trillion yen, Japan’s finance ministry said in a preliminary report, as yen-denominated crude oil prices slowed.
Primary income, which reflects returns on foreign investment, was 17.53 trillion yen.
The average exchange rate of USD/JPY in the six months was 134.92 yen, up 9.6% from the same period last year.
The depreciation of the yen has pushed up the overseas earnings of Japanese companies and the return on investment in yen terms, and it has also pushed up the cost of imports.
The weaker yen has boosted the purchasing power of foreign tourists visiting Japan, while inbound tourism has seen a recovery after strict border controls imposed in response to the COVID-19 pandemic were eased.
Japan’s tourism surplus increased more than 12 times year-on-year to 1.61 trillion yen, helping to cut the service deficit.
A tourism surplus is when foreign tourists spend more in Japan than Japanese spend abroad.
Concerns about the outlook for global growth and Japan’s exports linger as major economies other than Japan hike interest rates sharply. Strong domestic demand and a recovery in inbound tourism have helped the world’s third-largest economy despite persistent cost-push inflation.
Japan’s current account surplus was 1.51 trillion yen in June, mainly due to a 328.7 billion yen trade surplus, the first since October 2021, data from Japan’s economic sector showed.
Exports rose 0.5 percent to 8.63 trillion yen, while imports fell 14.3 percent to 8.30 trillion yen.
The primary income surplus was 1.68 trillion yen.
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