Japan logs record $193 billion current account surplus in 2024

Japan posted a current account surplus of 29.26 trillion yen ($193 billion) in 2024, a record high, driven by its highest-ever returns on foreign investments amid a weak yen and a decline in the trade deficit, the Finance Ministry data showed Monday.

According to Kyodo News, the surplus in the current account balance, one of the widest gauges of international trade, grew 29.5 per cent from a year earlier, rising for the second consecutive year and marking the highest since comparable data became available in 1985.

Primary income, which reflects how much Japan earned from overseas investments, climbed 11.3 per cent from the year before to 40.21 trillion yen, buoyed by higher returns from offshore subsidiaries in the financial, retail and auto sectors, the ministry said in its preliminary report.

Japan’s primary income has been boosted by returns from foreign direct investments by domestic companies and overseas dividend income.

Goods trade registered a deficit of 3.90 trillion yen, down 40 per cent, with exports rising 4.5 per cent to 104.87 trillion yen, led by strong demand for semiconductor-making equipment and vehicles.

Imports also increased 1.8 per cent to 108.77 trillion yen due to increased shipments of personal computers and nonferrous metals.

Meanwhile Dr. Thani Bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, affirmed that negotiations for the Comprehensive Economic Partnership Agreement (CEPA) between the UAE and Japan will be completed before the end of 2025.

In a statement to the Emirates News Agency, Dr Thani Al Zeyoudi explained that the negotiations for the agreement’s terms reflects the commitment of both friendly nations to enhancing economic cooperation and opening new horizons for developmental partnership, thereby contributing to economic prosperity and creating further opportunities for the business communities in both countries.

He pointed out that the UAE is Japan’s leading trade partner in the Arab World in terms of exports and imports, accounting for approximately 37 per cent of Japan’s total exports to Arab countries. Meanwhile, Japan is among the UAE’s top ten trading partners.

In September 2024, the UAE and Japan initiated discussions to reach a Comprehensive Economic Partnership Agreement, aiming to unlock new opportunities for economic, investment and trade relations, taking them to new levels of developmental cooperation.

Meanwhile Japan’s Nikkei share average ended nearly flat on Monday as investors weighed fresh US tariff threats, although a smooth meeting between Japan’s prime minister and US President Donald Trump eased some investor concerns.

The Nikkei closed up just 0.04 per cent at 38,801.17 after a choppy session, while the broader Topix shed 0.2 per cent to sit at 2,733.01.

Steelmakers narrowed losses to end down 0.2 per cent with Nippon Steel sliding 0.5 per cent, after Trump said he would announce new 25 per cent tariffs on Monday on all US steel and aluminium imports.

While a negative for companies that export steel and aluminium to the United States, similar tariffs were implemented during Trump’s first time in office, limiting the surprise factor, said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan.

“However, I think caution towards additional tariffs... will continue, and financial markets will likely continue to be sensitive,” he said.

Investors were relieved after Japanese Prime Minister Shigeru Ishiba’s first White House summit on Friday passed without major incident.

The meeting between Ishiba and Trump came off well, offering some support to Japanese equities, said Hiroshi Namioka, chief strategist at T&D Asset Management.

The United States has yet to announce any tariffs specifically targeting Japan, and while Trump pressed Ishiba to close Japan’s annual trade surplus with Washington, he expressed optimism this could be done quickly.

“When looking at the global picture, I believe Japan is in quite a good position,” said Namioka.

Japanese markets will be closed on Tuesday for a public holiday.

Among individual shares, earnings produced some of the biggest percentage winners, with Taiyo Yuden surging 22.1% after the firm announced an upward revision to its earnings forecast on Friday.

E-commerce and gaming company DeNA climbed 23.1 per cent, and Fujikura, which makes fibres used by data centres, jumped 7.1 per cent.

Heavyweights Fast Retailing and SoftBank Group dragged on the Nikkei, declining 1.2 per cent and 1.9 per cent, respectively.