Japan’s current account surplus more than halved to an eight-year low of 4.85 trillion yen ($33 billion) in the first half of fiscal 2022, weighed down by a record trade deficit caused by soaring imports and a sharp drop in the yen, according to Finance Ministry data on Wednesday.
The surplus in the April-September period fell 6.86 trillion yen from a year earlier, the second-highest amount on record, according to preliminary data from the ministry. The sharp decline underscores the vulnerability of the resource-poor nation that is heavily dependent on imports.
The country’s trade deficit stood at 9.23 trillion yen after imports grew twice as fast as exports.
Imports jumped 47.1% to a record 58.76 trillion yen, boosted by rising costs for crude oil, coal and liquefied natural gas amid Russia’s war in Ukraine and the sharp depreciation of the yen which inflates the prices of imports.
Exports rose 21.3% to 49.52 trillion yen, the largest on record, after shipments of cars and steel rose.
The yen depreciated sharply against the US dollar amid a widening interest rate differential between Japan and the US. The yen fell 22% year-on-year from April to September, with the dollar averaging 134.01 yen.
The weak yen pushed the primary income surplus, which reflects overseas investment returns, to a record 18.23 trillion yen, up 25.2%, partly because trading houses saw their repatriated profits increase amid soaring commodity prices.
In the six months to September, Japan saw an increase in foreign visitors compared to a year earlier, when strict border control measures were in place due to the COVID-19 pandemic.
The travel surplus decreased to 59.2 billion yen from 104.8 billion yen in the same period of 2021. A surplus means that the amount spent by foreign visitors to Japan was greater than the amount spent by locals. Japanese abroad.
The services trade balance recorded a deficit of 3.16 trillion yen.
A weak yen is a boon for exporters as their overseas earnings are boosted in yen terms. But the negative side of the depreciation of the yen is increasingly highlighted, the currency’s fall to its lowest level in more than three decades against the American dollar prompting an intervention to buy the yen by Japan in September. , the first since 1998.
The government is counting on a recovery in inbound tourism, with the weak yen making travel to Japan and shopping in the country cheaper for foreign tourists. The government removed the daily cap on new arrivals and eased restrictions on tourism in October.
In September alone, Japan recorded a current account surplus of 909.3 billion yen, down 45.0% from a year earlier.
The primary income surplus of 3.22 trillion yen helped the country run a current account surplus for the eighth straight month, despite a huge merchandise trade deficit of 1.76 trillion yen. The services trade deficit stood at 343.1 billion yen.