June 26, 2022

Japan’s finance ministry reports the country’s current account surplus to fall 39.4 percent to 1.2 trillion yen ($10 billion) from a year earlier. The decline can be attributed to the continued worsening of trade balance with slow auto exports.

According to a preliminary report released by the finance ministry, the current account balance, logged a 16th consecutive month of black ink due to solid primary income including returns on overseas investments. The index is one of the widest gauges of international trade. The surplus in September declined by 31.1 percent.

Current account balance data –

• Account surplus by components showed exports to increase of 11.7 percent year-on-year to 7.1 trillion yen.
• The increase in exports was boosted by an 80.1 percent rise in the steel sector due to higher prices, along with a 45.1 percent rise in those of semiconductor-producing equipment amid a global chip crunch.
• However, during the same period, the semiconductor shortage struck car shipments, which remained slow also on the back of supply disruptions of other vehicle parts produced in Southeast Asia due to the spread of COVID-19 infections.
• In value terms, the country’s mports grew at a faster pace than exports, up 28.3 percent to 6.9 trillion yen
• The purchases of crude oil saw increase in value by 81.0 percent and coal seeing an increase by 131.5 percent, amid a surge in energy prices.
• Due to the above, the country’s trade balance posted a 166.7 billion yen surplus, thus marking the first black ink in three months, although lower by 82.5 percent of 950.3 billion yen from the previous year’s black ink.
• The service balance in the reporting quarter came to a deficit of 575.4 billion yen, growing from 363.9 billion yen in the red a year earlier, as royalty payments by the domestic firms to foreign companies expanded.

According to a finance ministry official, the country’s primary income balance grew 11.5 percent to 1.8 trillion yen in the reporting period, up for the seventh month in a row. This was on the back of domestic firms, especially trading companies, which received more dividend payments from their investment in stocks of overseas natural resource-related businesses.