Japan Records Record Current Account Surplus in First Half, but Households Stay in "Saving Mode"

Japan posted a record-high current account surplus for the first half of this year, driven by increased dividend income from overseas investments and a decline in crude oil imports caused by the Middle East situation.

According to preliminary balance of payments data released by Japan's Ministry of Finance on the 10th, the current account surplus—which indicates the status of goods, services, and investment transactions with other countries—rose 22.5% from the same period last year to 17.4292 trillion yen (approx. 155.8771 trillion won).

This marks the largest ever for the first half of the year since comparable statistics began in 1985.

The trade balance, calculated by subtracting imports from exports, recorded a surplus of 742.1 billion yen (approx. 6.6369 trillion won).

The trade balance improved due to strong exports, including semiconductors, alongside a decrease in crude oil imports triggered by instability in the Middle East.

The primary income balance, which reflects interest and dividends from overseas investments, reached 20.4914 trillion yen (approx. 183.2719 trillion won) on increased earnings such as corporate dividends from overseas expansions, breaking the record for the highest first-half figure ever.

Japan's services balance for the first half recorded a deficit of 1.8223 trillion yen (approx. 16.2984 trillion won), affected by a decrease in Chinese visitors to Japan due to political tensions.

The current account for June, released alongside the half-year data, recorded a deficit of 92.3 billion yen (approx. 8.254 billion won), turning into a deficit for the first time in about 17 months.

The current account surplus for the previous month in May stood at 3.9683 trillion yen (approx. 35.4902 trillion won), showing a sharp deterioration over the span of a month.

This was analyzed to be the result of the trade balance recording a deficit of 135.2 billion yen (approx. 1.2091 trillion won) in June, coupled with an increase in dividend payments to foreign investors which narrowed the surplus in the primary income balance related to overseas investments.

Meanwhile, consumer spending by worker households in June, released by Japan's Ministry of Internal Affairs and Communications, fell 5.8% in real terms compared to the same month last year, excluding the effects of price fluctuations, marking a decline for the fourth consecutive month.

The scale of the decrease was the largest in two years and five months since January 2024.

The Nikkei newspaper pointed out that while worker households' real incomes rose 2.0% to maintain a positive trend for the sixth consecutive month, the trends in spending and income are moving in opposite directions.

This was analyzed as households turning increasingly toward thrift amid expectations that prices would surge significantly down the road due to instability in the Middle East.

According to a Bank of Japan survey, 55.0% of respondents said they "have less leeway" regarding their current living conditions, significantly outnumbering the 4.8% who said they "have more leeway."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.