Post by : Rameen Ariff

Japan’s current account surplus fell to 3.78 trillion yen ($24.9 billion) in August, marking a 4.8% decline compared to last year. The drop reflects challenges in overseas earnings, as returns from foreign investments weakened, signaling slower income from global markets.

The Finance Ministry’s preliminary report showed Japan’s primary income, including dividends, interest, and other foreign earnings, dropped 11.5% to 4.30 trillion yen. This indicates that Japanese companies and investors earned less from overseas assets, significantly affecting the overall account performance.

On trade, Japan recorded a small goods trade surplus of 105.9 billion yen, a positive shift from earlier deficits. Exports fell slightly by 0.4% to 8.36 trillion yen due to softer global demand, while imports declined more sharply by 6.0% to 8.25 trillion yen, easing the trade balance. The import decline is partly linked to lower domestic demand and falling commodity prices, while export weakness is tied to uncertainties in markets like China and the US.

The narrowing current account surplus highlights Japan’s economic balancing act. While reduced imports and a smaller trade deficit provide some relief, the drop in foreign income raises concerns about the sustainability of the surplus. Analysts warn that global market volatility and currency fluctuations could continue to affect investment returns, adding pressure on Japan’s external finances.

Japan’s policymakers will need to closely monitor trade flows and foreign earnings to ensure financial stability amid weak overseas income and cautious domestic demand.

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