Mar 26 2024: Japan’s Ministry of Finance has established a panel of experts to assess and enhance the country’s current accounts, as income gains from past Japanese investments abroad have taken precedence over traditional exports in driving financial growth.
Masato Kanda, the vice finance minister for international affairs and Japan’s top currency diplomat, highlighted significant structural changes in Japan’s balance of payments, with income gains surpassing trade surplus as a key contributor to the current account surplus since around 2010.
The panel, consisting of 20 private-sector experts including professors, economists, and strategists, convened to discuss various aspects impacting Japan’s current accounts. However, Kanda clarified that currency-related discussions are beyond the panel’s scope.
Discussions within the panel encompassed trade deficits, digital and research & development (R&D) shortfalls, and strategies for enhancing Japan’s competitiveness in these areas. The goal is to formulate proposals by June aimed at improving the balance of payments and optimizing earning and investment strategies, particularly domestically.
Key concerns addressed included the service account deficit and the impact of trade deficits alongside declining domestic investment. Kanda emphasized the need for targeted support to address these issues, as companies’ offshore production increases income gains but also leads to reinvestment abroad, contributing to stagnant domestic investment in human resources and innovation.