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Reference News Network reported on August 10 that according to the Nikkei report on August 9, with the depreciation of the yen, a structure is taking shape in which Japan earns profits through investment abroad rather than trade. The Ministry of Finance released the balance of payments statistics (preliminary values) for the first half of 2024 on the 8th, showing that the surplus of the primary income account representing investment income was 19.1969 trillion yen (about 130.5 billion US dollars), setting a new record. The trade account continued to lose money.

The current account, which shows the overall transaction status of goods, services and investment with foreign countries, showed a surplus of 12.6817 trillion yen, an increase of 59.2% over the same period last year. The current account consists of the trade account, which is exports minus imports, the primary income account obtained through foreign investment transactions, and the service income account, including tourism income.

In the first half of 2024, the surplus in the primary income account increased by 10%, while both the trade account and the service account showed deficits. Looking at the half-year period, the deficit situation has continued since the second half of 2021.

The largest share of the initial earnings was "direct investment income" earned through dividends from overseas subsidiaries, which amounted to 11.4022 trillion yen, up 4.5% from the same period last year. The results of Japanese companies' active overseas business development were reflected, and the depreciation of the yen also increased the amount converted into yen.

The "Securities Investment Income" from stock and bond investments was 7.1219 trillion yen, up 20% from the same period last year. As the US interest rate rises, bond interest also increases.

The trade deficit was 2.6118 trillion yen. Although resource prices have stopped rising, imports remain at a high level. At the same time, export growth was limited. After imports and exports were deducted, a deficit has been recorded for six consecutive quarters since the second half of 2021.

In the first half of 2007, when the current account surplus was the largest, the trade account surplus exceeded 6 trillion yen.

Japan's manufacturing industry has actively increased exports and earned a certain amount of profit through trade. The trade account is currently in deficit, but at the same time the primary income account surplus has increased to twice that of the time.

As manufacturing bases shift overseas, a profit structure that shifts from manufacturing to investment activities has been formed. Even with the unprecedented depreciation of the yen, it is difficult to increase exports. Behind this is the change in Japan's economic structure.

The services account deficit in the first half of the year was 1.7511 trillion yen, a 15.4% decrease from the same period last year.

This is due to the growth of the tourism account brought by the increase in foreign tourists. The tourism account surplus was 2.5939 trillion yen, more than 1.6 times the same period last year, setting a record high for half-year data. This is mainly because the number of foreign tourists visiting Japan from January to June exceeded 17 million, setting a new record.

On the other hand, the digital deficit, which is the payment of digital service royalties to foreign IT companies, continued to expand, reaching 3.1 trillion yen in the first half of the year, up 12.8% from the same period last year. The insurance-related deficit is also expanding due to reinsurance costs.

Unlike a trade surplus, the income surplus generated by investment activities has limited effect in increasing domestic employment.

As the way of making money with foreign economic activities changes, the impact of the current account surplus on the entire economy will also be different from the past. (Compiled by Liu Jieqiu)

Source: Reference News