Japan posted its biggest current account surplus of 25.34 trillion yen ($163 billion) in fiscal 2023, buoyed by record foreign investment returns and a sharp drop in its trade deficit on robust auto exports, government data showed Friday.
A revival of inbound tourism also lifted the country's travel surplus to its highest level, helping boost last fiscal year's surplus, as the weaker yen made travel to and shopping in Japan cheaper for foreign visitors.
Primary income, which reflects returns on foreign investment, totaled 35.53 trillion yen, up 0.6 percent from the previous year, boosted by higher overseas bond yields, which increased interest revenue, and a weak yen.
The trade deficit plunged nearly 80 percent to 3.57 trillion yen after exports grew 2.1 percent to 101.87 trillion yen while imports fell 10.3 percent to 105.44 trillion yen, according to the preliminary report by the Finance Ministry.
The overall surplus in the current account, one of the widest gauges of international trade, marked a roughly 2.8-fold increase from the previous year.
Resource-poor Japan's trade balance was deep in the red in fiscal 2022 due to surging imports amid higher energy prices. But the value of imports fell in the fiscal year ended March.
Exports, meanwhile, got a boost from strong auto demand in the United States, despite recession fears driven by aggressive interest rate hikes by the Federal Reserve. Outbound shipments from Japan topped 100 trillion yen for the first time.
The yen's rapid depreciation against the U.S. dollar, reflecting the different policy stances of the Bank of Japan and the Fed, has raised concern about its negative impact on the Japanese economy.
A weak Japanese currency tends to be a plus for exporters as it boosts their overseas profits when brought back home but it also inflates import costs. The yen was 6.7 percent weaker than a year earlier against the dollar and 11.2 percent against the euro.
The travel surplus more than tripled to a record 4.23 trillion yen, just as March marked the first time that the monthly count of foreign visitors topped 3 million.
The surplus means spending by foreign visitors to Japan exceeded the amount spent by Japanese overseas.
The uptick helped halve the country's services trade deficit to 2.45 trillion yen, though it failed to reverse the broader trend as increasing payments for digital and other services continued to weigh.
In March alone, Japan saw its current account surplus expand 44.0 percent to 3.40 trillion yen, the highest for the month since comparable data became available in 1985.
Primary income rose 1.4 percent to 3.44 trillion yen and the trade balance swung back to a 491.0 billion yen surplus.
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