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Balance of Payment Japan

In November 2016, the Japanese current account was in a surplus of 1800 billion yen after a seasonal adjustment, a moderate fall from 1929 billion yen in October 2016.

Published monthly by the Ministry of Finance. Updated till the month of November 2016 (published on January 12th, 2017).

Recent data trend:

Japan’s current account balance in November 2016 was in a surplus of 1800 billion yen after a seasonal adjustment, a moderate fall from 1929 billion yen in October 2016. At an annual rate, the surplus in November is 4% of Japan's GDP. On the bedrock of steady income surplus amounting to over 1 trillion yen per month, the low energy prices are enabling Japan to run a sizable trade surplus.  

While the exchange rate market seems to be focusing on interest rate differentials for now, we do believe that a high level of current account surplus would come to haunt those who prefer yen to remain weak.

Brief overview of “Balance of payment”:

Balance of payment statistics makes an account for all the flow of funds across Japan’s border. In these statistics, financial flows are divided into two large categories. One category is called Capital and Financial Account. Financial transactions that lead to transfers of assets/liabilities are included in Capital and Financial Account. The other category, known as the Current Account, includes other transactions such as trades of goods and services, payment of interest and dividends and transfers such as international aids. 

Historically, Japan usually had a Current Account surplus, mostly stemming from a trade surplus. In recent years, Income Account surplus has become significant factor, while Japan’s trade surplus diminished, even falling to a deficit. Japan’s Current Account surplus reached as large as 4.8% of GDP in 2007, but it has since declined to 0.7% of GDP in 2013. The trade balance turning from a surplus worth 2.4% of GDP in 2007 to a deficit worth 2.2% to GDP is the main cause. We think the current deficits are cyclical, rather than structural. In addition to the post-earthquake public investment demand, BoJ's aggressive monetary policy encouranged consumption and depressed private savings. Japan's current account deficit is the consequence of macroeconomic over-investment/spending. We expect Japan to regain current account surplus as the government starts to rein in its expansionary fiscal and monetary policies.     

For more information, visit the official government page

Source: MoF, JMA

The Next Release Date: February 8th, 2017.