In February 2025, Japan recorded a current account surplus of 4.0607 trillion yen—the largest monthly surplus in history. At first glance, this news might seem to indicate that the Japanese economy is doing well. However, a closer look at the figures reveals the underlying structure and challenges of Japan’s current economy.
What’s Behind the Strong Export Performance?
The main reason for the large current account surplus was the strong performance of exports, particularly automobiles and semiconductor manufacturing equipment. Semiconductor-related exports, in particular, have drawn attention due to the global resurgence in demand and the ongoing restructuring of supply chains—an area where Japan has a competitive edge.
At the same time, falling crude oil prices led to a decrease in import value, contributing to a trade surplus of 712.9 billion yen. In other words, Japan benefited from a dual effect of “selling more” and “buying less.”
The Contrasting Fortunes of Services and Income Balances
On the other hand, the services balance posted a deficit of 175.5 billion yen, driven largely by a decline in revenue from intellectual property. Although Japan is often referred to as a technology powerhouse, this shows that the country is not fully capitalizing on software and patent licensing income.
In contrast, the primary income balance recorded a strong surplus of 3.8817 trillion yen. This was largely due to substantial dividends and interest earnings from overseas investments. It highlights how the “financial assets” built up abroad by Japanese companies and investors are now a key pillar supporting the national economy.
A Temporary Windfall or Structural Strength?
It’s important to note that this record surplus was heavily influenced by external factors. For example, if crude oil prices rise, import costs will increase, potentially shrinking the surplus. Additionally, while a weaker yen boosts export competitiveness, it also diminishes the domestic purchasing power.
In short, this “record-breaking surplus” may be more a reflection of favorable external conditions than evidence of inherent structural strength in the Japanese economy.
Looking Ahead: How Can Japan Strengthen Its Earning Power?
What this news reveals is the pressing issue of how Japan—which currently excels in manufacturing and investment income—can expand its “earning power” going forward.
To ensure a sustainable current account surplus in the future, Japan will need to pursue initiatives such as:
- Enhancing competitiveness in software and intellectual property sectors
- Developing export industries that leverage digital and AI technologies
- Maximizing the quality and returns of overseas investments
As we examine the stories behind the economic indicators, now may be the time for Japan to reconsider its next steps on the global economic stage.