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Japan Inc.'s Overseas Profits and Tourism Buoy Current Account

Japan’s current account surplus was a record surplus for the month of August.

Japan Inc.'s Overseas Profits and Tourism Buoy Current Account
An employee holds 10,000 yen banknotes for a photograph at the Mizuho Bank Ltd. in Tokyo, Japan. (Photographer: Tomohiro Ohsumi/Bloomberg)

(Bloomberg) -- Japan’s current-account surplus widened slightly in August from a month earlier, supported by investment and dividends from overseas and the tourism boom. It was a record surplus for the month of August.

Highlights of balance of payments
  • Surplus was 2.38 trillion yen ($21.1 billion) versus a forecast of 2.22 trillion yen and following a surplus of 2.32 trillion yen in July.
  • The primary income surplus was 2.24 trillion yen.
  • The surplus in goods trade was 318.7 billion yen, versus a forecast of 264.3 billion yen.

Key Takeaways

Japan’s current-account has been in the black every month since June 2014, reflecting the size of the nation’s overseas investments and its trade surplus, which has been partly the result of a weaker currency. The current account surplus, which is more than 3 percent of the size of Japan’s gross domestic product, was a contributing factor in landing the country on a U.S. Treasury currency watch list.

Japan Inc.'s Overseas Profits and Tourism Buoy Current Account

Economist Takeaways

  • “I think the current account surplus will continue because the income balance has had a big surplus and the trade balance is stabilizing in the black,” said Yasutoshi Nagai, chief economist at Daiwa Securities Co. “That’s not a bad thing for an export-driven economy.”
  • “It’s good that the overall numbers are improving, but considering the probable effects on the yen and U.S.-Japan relations, the continued current accounts surplus may not be particularly positive,” said Hiroaki Muto, chief economist at Tokai Tokyo Research Center.
  • “In terms of U.S.-Japan trading relations, Japan is continuing to pile up a positive trade balance, and it’s easier for Japan to be seen with hostility,” Muto said.

--With assistance from Maiko Takahashi Isaac Aquino and Yoshiaki Nohara

To contact the reporters on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net, Connor Cislo in Tokyo at ccislo@bloomberg.net.

To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, James Mayger, Henry Hoenig