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Japan posts first current account deficit in nearly 1-1/2 years

Created at 10 Aug · 1:36 AM1 source↑ Market-relevant
IN SHORT

Japan recorded a current account deficit of 92.3 billion yen in June, the first in 17 months, driven by increased dividend payouts to foreign investors and surging oil import costs. For the first half of the year, however, the surplus rose significantly.

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Key Numbers

92.3 billion yenJapan's current account deficit in June
17 monthsTime since last current account deficit
1.51 trillion yenEconomists' median forecast for June surplus
1.28 trillion yenSurplus in June of the previous year
380 billion yenShrinkage in primary income balance in June
17.4 trillion yenJapan's record current account surplus in H1 2025
22.5%Increase in current account surplus for H1 2025
257.6 billion yenJapan's current account deficit in January
2 yearsTime since last current account deficit in January
1.75 billion U.S. dollarsJapan's January deficit in USD
230.5 billion yenMarket forecast for January deficit
17.7%Import growth in January
2.1%
Export growth in January
2.9379 trillion yenJanuary trade deficit surge
7.5022 trillion yenJanuary exports
10.4401 trillion yenJanuary imports
476.6 billion yenJanuary services balance deficit
30.4%Smaller services deficit compared to previous year
10%Expansion of digital deficit year-on-year
708.3 billion yenJanuary travel balance surplus
80%Increase in travel balance surplus from previous year
3.6015 trillion yenJanuary primary income balance surplus
20.5%Increase in primary income balance surplus year-on-year

Who's Involved

Ministry of Finance
Released data on Japan's current account
Reuters
Conducted a poll of economists
Makiko Yamazaki
Reported on Japan's economic data
Japan posts first current account deficit in nearly 1-1/2 years

↳ Why This Matters

The shift to a current account deficit, even if temporary, highlights the impact of global economic factors like rising energy prices and international investment flows on Japan's external balance. While the first half of the year showed a record surplus, the June figures underscore vulnerabilities to import costs and foreign investor payouts.

Key facts

  • Japan recorded a current account deficit of 92.3 billion yen in June.
  • This is the first current account deficit in 17 months.
  • Increased dividend payouts to foreign investors and higher oil import costs contributed to the June deficit.
  • For the first half of 2025, Japan's current account surplus increased by 22.5% to a record 17.4 trillion yen.
  • In January, Japan posted a current account deficit of 257.6 billion yen, the first in two years, due to a weaker yen and rising imports.

Japan's current account recorded a deficit of 92.3 billion yen in June, marking the first such shortfall in 17 months. This downturn from the usual surplus was primarily driven by increased dividend payouts from Japanese companies to foreign investors and a rise in oil import costs. Economists had anticipated a surplus of 1.51 trillion yen, and the actual figure contrasts sharply with the 1.28 trillion yen surplus recorded in June of the previous year.

The primary income balance, typically a significant contributor to Japan's current account surplus, shrank by 74% to 380 billion yen due to these larger dividend payments. Surging oil import costs also contributed to a trade deficit, further pushing the overall current account into deficit for the month.

Despite the June deficit, Japan's current account surplus for the first half of 2025 saw a substantial increase of 22.5%, reaching a record 17.4 trillion yen. This growth was underpinned by a trade surplus, largely fueled by strong exports of semiconductors crucial for AI data centers.

In a separate, earlier report, Japan had posted a current account deficit of 257.6 billion yen in January, the first in two years. This deficit was attributed to a weaker yen, which inflated import costs, and a widening trade deficit. Imports increased by 17.7% year-over-year, significantly outpacing export growth of 2.1%, partly due to increased demand for electronics ahead of the Lunar New Year. The yen's depreciation, while making exports more competitive, also raised the price of essential imports like fuel and raw materials.

Frequently asked questions

The current account is a broad measure of a country's trade in goods and services, plus net income from investments abroad and net transfer payments. A surplus means a country earns more from these transactions than it spends, while a deficit means the opposite.

The deficit was caused by higher dividend payouts from Japanese companies to foreign investors and increased costs for oil imports.

In January, Japan also recorded a deficit, the first in two years, driven by a weaker yen increasing import costs and a widening trade deficit, exacerbated by demand for goods before the Lunar New Year.

Despite the June deficit, the first half of 2025 saw a record surplus, suggesting a mixed picture. Future trends will depend on global energy prices, investment flows, and currency valuations.

What Happens Next

01Monitor future current account data for sustained trends.
02Assess the impact of global energy prices on Japan's trade balance.
03Observe currency movements and their effect on import costs and export competitiveness.

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How It Developed

Japan recorded a current account deficit of 92.3 billion yen in June.
This marks the first deficit in 17 months.
The deficit was attributed to increased dividend payouts to foreign investors and surging oil import costs.
For the first half of 2025, Japan's current account surplus rose 22.5% to a record 17.4 trillion yen.
A separate report indicated Japan posted a current account deficit of 257.6 billion yen in January, the first in two years, due to a weaker yen driving up import costs and a widening trade deficit.
The January deficit was influenced by increased demand for smartphones and electronic components ahead of the Lunar New Year, which boosted imports.
In January, imports rose 17.7% year-over-year, significantly outpacing export growth of 2.1%.

Sources

T1
Japan posts first current account deficit in nearly 1-1/2 yearsReuters
T2
Japan Posts First Current Account Deficit in Two Years ... - EconoTimeseconotimes.com
T2
Japan posts 1st current account deficit in 2 years-Xinhua - 新华网english.news.cn
T2
Japan posts first current account deficit in two yearsnst.com.my

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