Japan's annual current account surplus lowest on record

Yes, a success of Abenomics.

Another arrow in the foot, load up and fire another....

Probably shouldn't have shut down all of the nuclear power plants...

And this is exactly why Abenomics will fail! It relies on markets that no longer exist! Instead of taking innovative steps to improve the economy he just recycled the same old rubbish that lead to the fail of the economy in the first place. This sales tax hike is the final nail in the coffin. Most stores have reported a drop in sales of 10-20%. How does that balance a 3% tax increase? If the Japanese economy is so fickle that the deficit of importing fossil fuels is killing the economy they really need to be rethinking their energy use. However, my guess is, they are persisting in blaming everything on the imports of fossil fuels to gain favor to restart the reactors. The reality is, the problems with the Japanese economy and price fixing practices go a lot deeper than just the cost of importing fuel. Japan needs to join the TPP ASAP without any stipulations. It will be the only way to make the sales tax increase work for the economy instead of working against it. The corporations kept their tax cuts and the middle class (90% of the population) are suffering, thus making Abenomics an utter screw up!

John Galt,

Yes, let's put credit where credit's due.

The Man of the Hour - Shinzo Abe, whose Abenomics brought the country to its knees.

Japan’s annual current account surplus is the lowest on record, government figures showed Monday, as fossil fuel bills and a sliding yen overshadow rising exports.

So it's still a surplus? That means fiscal 2014 will be the year that Japan slips into chronic deficits then.

For fiscal 2013, the value of the goods, services and investments that left Japan exceeded those coming in by 789.9 billion yen, plunging 81.3% from 4.2 trillion yen the previous year.

If the value of goods, services and investments leaving coming exceeded those coming in as stated, it would be a deficit, not still a small surplus. I assume there is a mistake in the article here.

Disillusioned,

This sales tax hike is the final nail in the coffin. Most stores have reported a drop in sales of 10-20%.

Well without the sales tax hike Japan's fiscal position would not only be absolutely terrible, but Japan would also be seen to be doing nothing about it.

That type of behaviour might be bad (e.g. a non-zero probability "crisis" might eventuate partially as a result). At least in raising the tax rate Japan has shown a touch more than lip-service to the idea of fiscal discipline (although Japan's finances will still continue to get worse).

Also retailers of course will not have had a good April, but they did well before the tax hike (as GDP figures will show, this coming Thursday IIRC). So last quarter's GDP will be great, this quarters' GDP will be rubbish, but by then we should have a better idea if consumption has recovered.

Japan needs to join the TPP ASAP without any stipulations.

I totally agree. The LDP should just accept reality. They have the political capital to burn, and folks would love having lots of cheaper food imports to snap up. It's in the national interest to go for free trade, keeping protections in place for a few select groups is not.

The corporations kept their tax cuts and the middle class (90% of the population) are suffering, thus making Abenomics an utter screw up!

I count myself as middle class and I'm not suffering. I don't think printing money and spending other people's money is a successful economic plan, but hopefully Abe does come to the party on reforms and then we might be talking.

Drop the import tariffs on food so people can spend their money on other things

the debate over weather its time to start up the reactors again will rumble on for ages, Heres my point if they start them up again ( the ones that have met the new safety criteria ) why not if they are just stood there doing nothing? this will bring down the countries deficit

Not restarting the reactors is more dangerous to the health and sustainability of Japan (and the world) than keeping them shutdown

But the nation has recently been saddled with heavy deficits stoked by its dependence on importing fossil fuels to generate electricity, after nuclear reactors were shut down following the 2011 tsunami-sparked atomic disaster.

The article is about deflecting opinion away from the failure of Abenomics and focusing on restarting the nuclear power plants. The above section of the article is written to generate responses like this:

Probably shouldn't have shut down all of the nuclear power plants...

and this

Heres my point if they start them up again ( the ones that have met the new safety criteria ) why not if they are just stood there doing nothing?

The Japanese media are not independent of Government. If Japanese media does not tow the Gov't line they wont be invited to the parties anymore. Articles like this are strategic, not designed to inform.

Reduce the country's dependence on fossil fuels, get some reactors sorted certified and restarted, the yen dollar is at around 102 how do you think things were happening when it was at 118 - 120 before 2008 collapse ?

Remove the burden of importing all this oil and things will be different.

Exports are improving but not yet back to pre 08 levels, things will improve, I can't wait to laugh in the face of the dooms dayers in time. The Japanese economic world is not ending, fools.

Many countries survive on fossil fueled energy, but Japan can not? Guess it's a cultural thing?

HowardStern,

It's an English language article, from AFP, a foreign media company... hardly in the government's pocket. But you may be right that AFP articles do not inform. Some of their reporting on other topics recently has been very dodgy indeed.

However, my personal belief (happy to be shown otherwise with figures) is that the trade deficit is due largely to increased energy imports in the wake of the nuclear plant shutdowns.

The Man of the Hour - Shinzo Abe, whose Abenomics brought the country to its knees.

Abe has been in office for just over a year, Japan has been on it's knees much longer than that. One could argue that the collapse started back when the bubble burst, and this is probably true, Japan has not recovered since then. And once the population began shrinkng, any hope of future recovery vanished.

Many people think that Japan's economy is export-driven, but 60% of what Japanese companies produce is consumed domestically. With the population decreasing by about 300,000 people per year, there is mo hope for growth in the domestic market, and with fierce competition from other parts of Asia, focusing on exports is going to be a tough road to follow.

Abe (and his predecessors) is operating on the fundamental principle that people are stupid. Unfortunately, he is right. "How fortunate for rulers that men are stupid " said Adolph Hitler. It seems little has changed since his day. The government will squander as much as it can, and no one will care.

Abenomics supporters, what say you to this? I agree with sangetsu03. Not that I support Hitler or anything, but that quote is 100% accurate.

sangetsu03,

I'm in agreement with much of your post.

I'd just like to make a small comment.

You write:

Abe has been in office for just over a year, Japan has been on its knees much longer than that.

Well, to elaborate on the analogy, I would agree that Japan has been tottering since the bubble burst.

I would estimate that it's on its knees now. It hasn't keeled over, breathed its last and "gone to join the choir invisible."

Yet.

Abe could have done so much.

But he didn't.

I'd like to take your Adolph Hitler quotation and turn it around:

"How unfortunate for taxpayers that high ranking government officials are stupid."

Abenomics is the cause, eh? So what does Abenomics have to do with rising imports of fossil fuels? Indeed, if energy imports were falling in this post 3/11 world, that WOULD be worrisome, since it would indicate lower industrial activity.

Exports were up 12 percent, in case you missed that part. The posters here seem to be yearning for the many years of stagnation/negative growth, which led to the problems the gov't is currently trying to fix.

and once again Jefflee gets it while the usual suspects either cannot comprehend things, have no idea on how things work or are just plain old fashioned dumb.

We often hear about the effect of the cost of imported fossil fuels because they have to be imported. Many say that restarting nuclear reactors will reduce the dependance on imported fossil fuels.

Could someone tell me where uranium is mined in Japan? Or does uranium have to be imported, too?

I think the amount of Uranium is cheaper than the amount of oil, hence why nuclear power is cheaper to produce than oil fired power.

The “ever-dwindling” trade surplus is fresh sign that Japan’s is losing its competitive edge in highly completive international trade markets.

The export figure of first quarter of 2014 will be reported this week; which will provide fresh data to point where Japan’s economy would be propelled, downward or upward.

Based the trade data collected so far this year, the Japan’s export does not look like a bright spot, the catalysts may range from shrinking international market shares for Japanese goods and services to a stronger yen. One thing is clear if Japan’s export slide significantly, BOJ will be prompted to push another batch of monetary easing to devalue yen.

Whether it’s Good, bad or ugly in Japan’s upcoming economic data, Abenomics will be tested both on its viability and durability.

"Many people think that Japan's economy is export-driven, but 60% of what Japanese companies produce is consumed domestically"

I think its the other way around. Most people work in Jobs that make monozukuri items to be exported. Then again all the items sold here are Japanese.

Who knows where this place is headed. Ask any Japanese and the economy is roaring, read foriegn news and Abenomics is a failure.

Tokyo Olympics and Casinos will arrive soon, thats surely to bring in money.

@fxgai, well spotted! I hope that doesnt deter from the point that this article is more about nuclear power than it is about Japan's "lowest annual current account deficit".

Abenomics is the cause, eh? So what does Abenomics have to do with rising imports of fossil fuels? Indeed, if energy imports were falling in this post 3/11 world, that WOULD be worrisome, since it would indicate lower industrial activity.

Jeff...did you read the article? Because it answers your question:

The yen’s sharp depreciation since late 2012 has also pushed up import costs.

For example, crude oil prices soared 16.6% in yen-denominated terms on year, but in dollar-terms, it fell 3.4%, the ministry said.

The financial value of crude oil imports to Japan rose 18.4% while the actual volume of imported oil only went up by 1.5%, the ministry said.

Abe's forcing the BOJ to adopt his loose money policy -- you do remember him dumping the head of the BOJ and bringing in his own guy as one of his first acts? -- has increased the deficit beause of the dramatic drop in value of the yen. The actual volume of imported oil only went up by 1.5%, by the way, which does not indicate any robust recovery for the economy. Maybe even "worrisome" to us eyour term.

Still positive, though.

Without the excessive oil imports things would look remarkably different, you cannot get away from that fact, reduce the dependence on oil and you'll change the face of the game.

It’s a big mistake to play lose of nation wealth which is the currency. To speculate or risk nation’s wealth to cover-up gain for stagnant economy lacks governance and management vision. Abenomics is never a formulation right for Japan. Losing Yen is meant to term it Abenemics. The flow of blood like the flow of money is anemic in essence. With all the effects made to make this nation so powerful losses its strength and getting sick. The prices all Japanese pay it’s downfall. Still I believe PM Abe has the leadership to improve Japan if he divert the attention to more market driven economy and global vision. He has to open Japan much more. Augment tax sources in number but against tax increase.

That is Abenomics for you. We used to call this "Voodoo economics", but Abenomics sounds so much nicer.

@jerseyboy

"Abe's forcing the BOJ to adopt his loose money policy...has increased the deficit beause of the dramatic drop in value of the yen."

The yen's current range, around 100-103, is normal if you look at the past 15 years. You, however, are making a comparison to the months following 3.11 when the yen skyrocketed to its highest level in modern history, which was temporary and unsustainable.

Again, someone, tell me why post-Fukushima energy crisis is the fault of Abenomics. It's odd that people have strong opinions on something, yet are unable to explain or understand why.

I'd like to see some comparisons of Japanese companies that manufacture their products in Japan vs other countries (China). It's a question I have, because many Japanese items I see and buy, not all, seem to be manufactured in China.

So, these products that are manufactured in China, are they exported from China, or are they brought back to Japan and then exported? If they are exported from China, does the J Gov. consider these Japanese exports?

@FizzBit

Japan's most important exports are usually invisible to the consumer: machine tools, optics, chemicals, electronic components, automotive components, infrastructure and related materials, etc. The exception is cars, and that sector has been quite healthy during the Abenomics era.

In other words, Japan is a mature industrial economy, just like the US and Europe.

@JeffLee

Puts into perspective for me.

JTDanMan,

Still positive, though.

The trend does not look positive, though. Take a look at this. Since 2007 it looks like the trend is down.

http://www.tradingeconomics.com/japan/current-account

JeffLee,

The yen's current range, around 100-103, is normal if you look at the past 15 years.

On a nominal basis perhaps, but for a fair comparison one has to consider what you could buy with the same amounts of each currency 15 years ago. The yen should have been strengthening over time since Japan's prices were flat or ever so mildly in deflation, versus inflation in the US.

You, however, are making a comparison to the months following 3.11 when the yen skyrocketed to its highest level in modern history

Not that much of a skyrocket... 3.11 by itself caused only a relatively minor blip. The yen was in the low 80's even without the short term speculation in the wake of the disaster.

http://finance.yahoo.com/echarts?s=USDJPY%3DX+Interactive#symbol=USDJPY=X;range=5y

which was temporary and unsustainable.

Easy to say in hindsight. But it wasn't until Abe as newly elected head of the LDP gained attention with his proposed policy mix in Autumn 2012 that the yen started to get smashed. It's pretty clear that Abenomics was the short term trigger

But I think it was going to weaken anyway. It was unsustainable yen strength given the fact that Japan's fundamentals have weakened dramatically in recent years. Like the current account surplus above, the trade balance used to be persistently in surplus, but since over the past couple of years it's persistently in deficit.

http://www.tradingeconomics.com/japan/balance-of-trade

This is also why I expect the yen to continue it's decline in the years ahead, unless Abe or his successors come up with a plan that will see money flow into Japan rather than out of it.

Again, someone, tell me why post-Fukushima energy crisis is the fault of Abenomics.

The energy problems are not his fault, but his actions to weaken the yen (thus increasing the cost of energy imports) rather than opt for a more appropriate policy mix is. He should have placed more emphasis on the third arrow than he has. Just weakening the yen to generate inflation is pointless. Inflation will usually increase when the economy picks up. Instead of policies to make the economy pick up, he just tried to create inflation...

On TV this morning I saw Abe was calling for a package of reforms to be put together in the speedy way by June (next month). But it's already May 2014, and he was elected in December 2012. He had better get this right soon.

"It was unsustainable yen strength given the fact that Japan's fundamentals have weakened dramatically in recent years."

First off, it was speculation, not "fundamentals" that was behind the wild currency movements then. Speculators bought up the yen like crazy because global circumstances at the time made it a top "safe haven" currency.

Later, all Abe had to do was "talk down" the yen, before he even lifted a finger, policy-wise. How could he have moved the yen so dramatically -- merely through talking -- if the rates reflected "fundamentals"?

IF the nuke plants go back on line, which they probably will, Japan's trade and account surpluses will stop declining, and the yen's safe haven status will again be enhanced. Smart people know the fiscal debt doesn't matter, since Japan has proved time and time again it has the ability to run fiscal surpluses risk-free (given that a major owner of the govt debt is...the gov't!!)

I should be getting paid for writing this stuff. Actually, I do, but not enough.

First off, it was speculation, not "fundamentals" that was behind the wild currency movements then.

Speculators bought up the yen like crazy because global circumstances at the time made it a top "safe haven" currency.

It was considered a "safe haven" because of it's fundamentals. You might define "speculators" differently, but by mine they are merely a short term influence. Speculators who bought yen would have sold it later in order to actually make money, as is their objective. So their net effect is neutral.

The fundamentals that had long been positive for yen up until that time would have existed without speculators. But those fundamentals have since deteriorated in a significant way.

Later, all Abe had to do was "talk down" the yen, before he even lifted a finger, policy-wise. How could he have moved the yen so dramatically -- merely through talking -- if the rates reflected "fundamentals"?

There is talk and then there is talk. Where previous attempts at direct intervention failed because they didn't change the underlying fundamentals, Abe signaled that a major shift in fundamentals was coming up. Namely, instead of zero-inflation (or mild deflation) he was going to have the BOJ impose a annual inflation target of 2% or 3%. That coupled with the trade balance deficits and deteriorating current account surplus, I think, was the straw that broke the camel's back.

On a sinking ship, the smart people are those who are preparing to evacuate before they are beneath the waves. (And they also learnt how to swim in advance as well.)

IF the nuke plants go back on line, which they probably will, Japan's trade and account surpluses will stop declining, and the yen's safe haven status will again be enhanced.

Such an improvement in the trade balance would be positive, but the trend for the current account surplus has been one of deterioration since before the nuclear power plants were knocked offline.