Japan current account surplus jumps to November record

JAPAN’S current account surplus logged a surprising surge in November 2022, marking a record for the month.

The surplus came in at 1.8 trillion yen (S$18.3 billion), more than triple the median forecast by economists in a Reuters poll. This came as weakness in the yen drove income gains from portfolio investment and direct investment overseas to their highest level for the month. The surplus was also helped by an easing of Japan’s trade deficit.

Kenta Maruyama, an analyst at Mitsubishi UFJ Research and Consulting, said: “The impact of the weak yen boosting import bills has run its course, curbing trade deficits, while the currency’s weakness helped push up yen-denominated income gains.”

The November 2022 data marked the first year-on-year growth in Japan’s current account surplus since March last year. The metric has long been regarded as a sign of the East Asian country’s export might, and a source of confidence in the safe-haven yen. But in recent years, the account has occasionally fallen into deficit on a monthly basis.

Meanwhile, the primary income surplus, which includes interest payments and dividends from investments overseas, hit 3.7 trillion yen in November. It was the largest amount for the month, since comparable data became available in 1985. The previous record was 2.4 trillion yen in November 2021.

Japan’s trade deficit was 1.5 trillion yen for the month, narrowing from the previous month’s 1.9 trillion yen. But it was still a record for November, after imports grew more than exports in value terms.

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SMBC Nikko Securities economists said that a pausing in both yen weakening and high oil prices helped to reduce the trade deficit, while the travel account surplus had also grown on the back of recovery in inbound tourists. REUTERS