Japan's Record-Breaking Current Account Surplus in 2024
Japan's current account surplus reached a record high of 29.26 trillion yen ($193 billion) in 2024, driven by a combination of factors. The most significant contributor was the highest-ever returns on foreign investments, fueled by a weak yen and a decline in the trade deficit.
The surplus, which represents the difference between the value of a country's exports and imports, grew by 29.5% compared to the previous year. This marks the second consecutive year of growth and the highest surplus recorded since comparable data became available in 1985.
Several factors contributed to this impressive performance. Firstly, primary income, reflecting earnings from overseas investments, climbed by 11.3% to 40.21 trillion yen. This increase was driven by higher returns from offshore subsidiaries in the financial, retail, and auto sectors.
The weak yen played a crucial role in boosting primary income. The currency averaged 151.48 against the U.S. dollar in 2024, a 7.8% depreciation compared to the previous year. This depreciation inflated the value of returns from foreign direct investments and overseas dividend income.
The goods trade balance also contributed to the surplus, registering a deficit of 3.90 trillion yen, a 40% decrease from the previous year. This decrease was due to a 4.5% increase in exports, reaching 104.87 trillion yen, driven by strong demand for semiconductor-making equipment and vehicles.
Imports also increased by 1.8% to 108.77 trillion yen, primarily due to increased shipments of personal computers and nonferrous metals. However, the growth was capped by declining prices for coal and energy, leading to a decrease in the value of these purchases.
The services trade deficit also shrank by 10.3% to 2.62 trillion yen, driven by an expansion of the travel surplus. This surplus reached a record 5.90 trillion yen, fueled by a record 36.87 million foreign tourists visiting Japan in 2024, partly due to the weaker yen.
In conclusion, Japan's record-breaking current account surplus in 2024 was driven by a combination of factors, including high returns on foreign investments, a weak yen, and a decline in both the goods and services trade deficits. This impressive performance highlights the strength of the Japanese economy and its ability to adapt to changing global conditions.
5 Comments
Rotfront
This is a ticking time bomb. The current account surplus is unsustainable and could lead to a financial crisis in the future. Japan needs to take action now.
Matzomaster
This is a warning sign of an unsustainable economic model. Japan needs to diversify its exports and reduce its reliance on foreign investments.
Karamba
This news reinforces the need for a more equitable global economic system. Developed countries like Japan should be doing more to help developing countries.
Matzomaster
This is fantastic news! It shows the strength and resilience of the Japanese economy. Well done!
Karamba
This news shows that Japan is a responsible global player. It is using its surplus to invest in development aid and humanitarian assistance.