Japan's 2022 Current Account Surplus Lowest In 8 Years

Japan’s current account surplus nearly halved in 2022 from a year earlier to ¥11.44 trillion ($87 billion), its lowest level in eight years, weighed down by a record trade deficit caused by swelling imports and a weakening yen, the Finance Ministry said, Noriyuki Suzuki reported for Kyodo News.

Photo Insert: The nation’s surplus in the current account, one of the widest gauges of international trade, was the smallest since hitting ¥3.92 trillion in 2014.

The biggest ever year-on-year decline, of ¥10.15 trillion, came despite a record surplus in primary income, which reflects returns on foreign investments made by Japanese firms, underscoring the magnitude of the hit to resource-scarce Japan from surging imports of higher-priced energy and other items, Japan Times also reported.

The nation’s surplus in the current account, one of the widest gauges of international trade, was the smallest since hitting ¥3.92 trillion in 2014.

Japan’s trade deficit stood at ¥15.78 trillion after imports jumped 42.0% to ¥114.47 trillion, outpacing exports that grew 19.9% to ¥98.69 trillion.

The values of both imports and exports were the highest since comparable data became available in 1996, according to the ministry’s preliminary data. Primary income came to a surplus of ¥35.31 trillion, quadrupling from a year earlier.

In 2022, the yen fell nearly 20% against the dollar, which inflated the value of imports to the detriment of the nation but boosted the overseas earnings of Japanese exporters.

“The trade deficit was massive because of energy imports and the weaker yen inflating import costs. But it will likely become smaller this year as energy prices stabilize. The large increase in primary income should be temporary,” said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.

“Over the longer term, Japan’s current account surplus is expected to shrink and the balance will fall into the red,” Kodama said. The rapid depreciation of the yen cut into national wealth in 2022, with Russia’s war in Ukraine sending crude oil and other commodity prices surging.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic