TOKYO: Japan posted a current account surplus of 3.93 trillion yen, or about $24.8 billion, in February, as strong returns on overseas investments helped offset softer trade-related gains and a continued shortfall in services. Preliminary balance of payments data released by the Ministry of Finance showed the surplus was nearly unchanged from a year earlier, edging down 0.1%, but rose sharply from a revised 931.0 billion yen in January, reflecting the scale of income flows from abroad into the world’s third-largest economy.
The largest contribution came from primary income, which recorded a surplus of 4.24 trillion yen in February, up 11.6% from a year earlier. That category includes dividends, interest and other earnings from Japan’s foreign investments, and it has become a central support for the country’s external balance. The data showed that income from overseas assets remained strong even as other parts of the current account delivered more modest support, underscoring the weight of investment returns in Japan’s monthly balance of payments.
Japan’s goods account stayed in surplus in February, but the margin narrowed sharply from a year earlier as import growth outpaced exports. The goods surplus came to 267.6 billion yen, down 67.0%, with exports rising 2.8% and imports increasing 9.7%. The services account remained in deficit at 284.5 billion yen, while the secondary income account, which includes transfers such as aid and remittances, posted a deficit of 290.8 billion yen. Taken together, those figures left primary income as the main engine of the overall current account surplus.
Income flows anchor surplus
On a seasonally adjusted basis, Japan’s current account surplus stood at 2.71 trillion yen in February, down 13.6% from the previous month. The monthly data pointed to some moderation after January when adjusted figures were stronger, but still showed a substantial surplus by historical standards. Within services, travel remained one of the brighter areas, with the travel surplus widening to 560.6 billion yen from 517.9 billion yen a year earlier, indicating sustained spending by inbound visitors even as the broader services account stayed in deficit.
The February figures add to a longer trend in which Japan’s external position has been increasingly supported by earnings on overseas assets rather than by trade alone. While the country continued to register a goods surplus in the month, the much larger contribution from primary income highlighted the extent to which dividend and interest income have shaped the headline balance. That pattern has become a defining feature of Japan’s balance of payments, particularly in periods when import costs rise faster than export values.
Trade gains narrow as imports rise
The latest release showed that stronger import growth was a key factor behind the reduced goods surplus, even as exports remained positive on an annual basis. At the same time, the persistent deficit in services limited the contribution from cross-border service transactions, despite the improvement in travel. The result was a current account profile in which overseas income more than compensated for weaker support from trade and services, allowing Japan to maintain a large overall surplus in February despite mixed performance across major components.
For policymakers, investors and companies tracking Japan’s external accounts, the February data offered a detailed snapshot of how the country’s international earnings continue to support the broader balance of payments. The combination of a large primary income surplus, a smaller but still positive goods balance, and deficits in services and secondary income left Japan with one of its strongest monthly current account readings this year. The figures also showed that while the structure of the surplus may shift month to month, overseas investment income remains central to the overall result. – By Content Syndication Services.