Japan's current account surplus nearly halved in 2022 from a year earlier to 11.44 trillion yen ($87 billion), its lowest level in eight years, weighed down by a record trade deficit caused by swelling imports and a weakening yen, the Finance Ministry said Wednesday.
The biggest ever year-on-year decline of 10.15 trillion yen came despite a record surplus in primary income, which reflects returns on foreign investments made by Japanese firms, underscoring the magnitude of the hit to resource-scarce Japan from surging imports of higher-priced energy and other items.
The nation's surplus in the current account, one of the widest gauges of international trade, was the smallest since hitting 3.92 trillion yen in 2014.
Japan's trade deficit stood at 15.78 trillion yen after imports jumped 42.0 percent to 114.47 trillion yen, outpacing exports that grew 19.9 percent to 98.69 trillion yen.
The values of both imports and exports were the highest since comparable data became available in 1996, according to the ministry's preliminary data.
Primary income came to a surplus of 35.31 trillion yen, quadrupling from a year earlier.
In 2022, the yen fell nearly 20 percent against the U.S. dollar, which inflated the value of imports to the detriment of the nation but boosted the overseas earnings of Japanese exporters.
"The trade deficit was massive because of energy imports and the weaker yen inflating import costs. But it will likely become smaller this year as energy prices stabilize. The large increase in primary income should be temporary," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.
"Over the longer term, Japan's current account surplus is expected to shrink and the balance will fall into the red," Kodama said.
The rapid depreciation of the yen cut into national wealth in 2022, when Russia's war in Ukraine sent crude oil and other commodity prices surging.
On the bright side, a weaker yen makes travel to Japan cheaper for foreign visitors. Japan reopened its doors to foreign tourists after its strict COVID-19 border control measures drew criticism at home and abroad.
Japan's services trade deficit widened to 5.61 trillion yen, despite its travel surplus roughly doubling to 436 billion yen helped by an increase in foreign visitors.
The travel balance reflects money spent by foreign visitors to Japan minus the amount spent by Japanese overseas.
In December alone, the current account surplus came to 33.4 billion yen, the smallest ever for the month and down 90.9 percent from a year before.
The trade deficit more than tripled to 1.23 trillion yen after imports rose more than exports. Primary income came to 1.80 trillion yen, the largest on record for December, the ministry said.
For exporters, the backbone of the world's third-largest economy, a slowing global economy is a concern. Aggressive interest rate hikes by the Federal Reserve have raised fears of a recession in the United States, while economists expect slower growth in China, a major trading partner for Japan.