Japan’s current account balance shows deficit for the first time in two years

The balance of payments statistics (preliminary value) for January 2025 released by the Ministry of Finance of Japan on March 10 showed that the current account balance (reflecting the transaction status of goods and services with overseas countries) was a deficit of 257.6 billion yen. This is the first deficit in two years since January 2023. Japan was affected by the widening trade deficit during the Chinese Spring Festival.

The current account balance consists of the trade balance of exports minus imports, the service balance including tourism balance, and the first income balance showing the interest and dividend balance from overseas investment.

Japan’s trade balance in January was a deficit of 2.9379 trillion yen, an increase of 92.9% over the same period last year. Exports of automobiles and other products increased, and the export value increased by 2.1% to 7.5022 trillion yen. On the other hand, the import value increased by 17.7% to 10.4401 trillion yen, and the increase in import value exceeded the export value.

China’s Spring Festival holiday in 2025 will be from January 28 to February 4. This is earlier than February 10 to 17 in 2024, which will have an impact on January. Due to the shutdown of logistics and factories in China, Japan’s exports have decreased, and at the same time, as Japan needs to ensure inventory before the Spring Festival, imports from China are increasing.