Japan’s Current Account Surplus Surges to Record

By Makiko Yamazaki
TOKYO (Reuters) – Japan’s current account surplus jumped to a record last year, data from the finance ministry showed on Monday, as a weaker yen boosted returns on foreign investments, helping to offset a trade deficit effectively.

The surplus in the current account stood at 29.3 trillion yen ($192.67 billion) in 2024, the largest since comparable data became available in 1985, representing a 29.5% increase from the previous year.

Key Drivers of Surplus

Primary income from securities and direct investments overseas remained the biggest contributor, with a record 40.2 trillion yen in surplus, driven by Japanese companies pursuing growth abroad, including acquiring foreign firms.

The trade deficit narrowed by 40% to 3.9 trillion yen due to brisk exports of automobiles and chipmaking equipment, combined with lower energy import costs.

The surplus from travel rose to 5.9 trillion yen, reflecting thriving inbound tourism.

December Statistics

For December, Japan’s current account surplus stood at 1.08 trillion yen, down from the previous month’s 3.35 trillion yen.

Historical Context

Japan’s current account surplus was once seen as a sign of export strength and confidence in the safe-haven yen. However, the composition has evolved over the last decade with trade no longer generating a surplus due to rising energy import costs and increased offshore manufacturing by Japanese companies.

Japan now offsets the trade deficit with a robust primary income surplus, which includes interest payments and dividends from past investments overseas. However, most of this income earned abroad is reinvested rather than being converted into yen, potentially weakening the Japanese currency.

“There is no reason to repatriate because overseas investments yield higher returns than at home,” said Norinchukin Research Institute chief economist Takeshi Minami.

Trade Relations Pressures

Japan is facing pressure from the United States, its largest export destination, to close its $68.5 billion annual trade surplus, a demand emphasized by President Donald Trump during Prime Minister Shigeru Ishiba’s recent White House visit.

> ($1 = 151.5700 yen)