Japan’s Current Account Surges to a Recent High - NAB
Research Team at NAB, notes that the Japan’s current account surplus surged to ¥16.64 trillion in 2015 (3.3% of GDP), the strongest outcome since 2010.
Key Quotes
“The goods account improved by ¥11.3 trillion (to -¥643.4bn), driven largely by falling crude prices. Overall, imports fell by 10.3%, while exports increased by 1.5%.
The services deficit virtually halved to -¥1.56 trillion. There was a discernible improvement in the travel balance, rising from a -¥44.1bn deficit in 2014 to a ¥1,121.7bn surplus in 2015. There were 19.7 million international tourists visiting Japan in 2015, a 47.1% increase on 2014. There was a particularly strong influx of Chinese tourists, with Chinese tourist numbers rising by 10% during 2015. A weakening yen, easier visa rules and measures such as tax-free shopping have bolstered foreign visitor arrivals to Japan.
Government data indicates that hotel stays by foreign visitors surged 48.1% to 66.37 million in 2015, a record outcome. Tokyo, Osaka and Hokkaido were among the most popular destinations for foreign visitors. Besides, Kyoto and Okinawa also experienced witnessed strong demand for accommodation and other services.
The Japanese Government is aiming for 20 million international tourists by 2020, the year that Tokyo is holding the Olympic Games. It appears that they will reach the target before that, if current trends continue.
Both goods and services, despite notable improvements, recorded modest deficits. The segment in which Japan has performed very strongly over a number of years in the Primary income balance, and it represents earnings from overseas Japanese investments. Earnings from this category amounted to ¥20.7 trillion in 2015, a 15% improvement on 2014’s level.
Japan’s strong earnings from overseas is also reflected in its net international investment position, which basically is a measure of net foreign assets. Japan’s net international investment position is 70% of nominal GDP, a very strong figure.
In summary, the Current account and Net IIP indicate a very healthy external position. However, a strong current account creates upward pressure on the Japanese Yen.”
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