Japan's current account surplus more than halved to an eight-year low of 4.85 trillion yen ($33 billion) in the first half of fiscal 2022, weighed down by a record trade deficit caused by soaring imports and the yen's sharp decline, Finance Ministry data showed Wednesday.
The surplus in the April-September period fell by 6.86 trillion yen from a year earlier, the second-highest amount on record, according to the ministry's preliminary data. The sharp decline underscores the vulnerability of the resource-poor nation that relies heavily on imports.
The country's trade deficit stood at 9.23 trillion yen after imports grew twice as fast as exports.
Imports jumped 47.1 percent to a record 58.76 trillion yen, boosted by the increased costs of crude oil, coal and liquefied natural gas amid Russia's war in Ukraine and the yen's sharp depreciation that inflates import prices.
Exports grew 21.3 percent to 49.52 trillion yen, the largest ever, after car and steel shipments increased.
The yen has dropped sharply against the U.S. dollar amid the widening interest rate differential between Japan and the United States. The yen fell 22 percent from a year earlier in April to September, with the dollar averaging 134.01 yen.
The weaker yen pushed the surplus on primary income, which reflects returns on overseas investments, to a record 18.23 trillion yen, up 25.2 percent, partly because trading houses saw their repatriated profits surge amid soaring commodity prices.
In the six months to September, Japan saw an increase in the number of foreign visitors compared with a year earlier, when strict border control measures were in place due to the COVID-19 pandemic.
The travel surplus shrank to 59.2 billion yen from 104.8 billion yen in the same period of 2021. A surplus means the amount spent by foreign visitors to Japan was higher than the amount spent by Japanese abroad.
The services trade balance saw a deficit of 3.16 trillion yen.
A weak yen is a boon to exporters because their overseas earnings are boosted in yen terms. But the negative side of the yen's depreciation has increasingly come to the fore, with the currency's plunge to its lowest level in over three decades against the U.S. dollar prompting a yen-buying intervention by Japan in September, the first since 1998.
The government is counting on a recovery of inbound tourism, with the feeble yen making trips to Japan and shopping in the country cheaper for foreign tourists. The government scrapped the daily cap on new arrivals and eased restrictions on tourism in October.
For September alone, Japan reported a current account surplus of 909.3 billion yen, down 45.0 percent from a year earlier.
Primary income surplus of 3.22 trillion yen helped the country to record a current account surplus for the eighth straight month, despite a massive goods trade deficit of 1.76 trillion yen. The services trade deficit stood at 343.1 billion yen.