TOKYO: The advisers to Japanese Prime Minister Fumio Kishida’s top panel urged the government on Wednesday to prevent the current account surplus from shrinking further so as to avoid affecting the currency market.
Japan has long boasted of a hefty current account surplus, a source of confidence in its safe-haven yen, but surging fuel import costs and slowing exports amid the Ukraine crisis are creating a trade deficit, hurting Japan’s balance of payments.
Japan’s shrinking current account surplus helped push the yen to a two-decade low beyond 129 yen earlier this month. It traded around 128 yen to the dollar since then.
“Persistent declines in current account surplus could impact on financial and currency markets,” the four private-sector advisers at the Council on Economic and Fiscal Policy said.
The 11-member top advisory panel is comprised of ministers, lawmakers and the Bank of Japan Governor Haruhiko Kuroda.
“We must build an economic structure that is resilient to external shocks,” the advisers said in a proposal presented at a meeting of the panel.
The advisers also called for steps including decarbonisation efforts, such as restarting nuclear reactors early and saving energy, exporting agricultural produce and promoting inbound tourists to try to improve the current account balance.
“We must resume entry aimed for tourism in stages in order to help foreign tourists recover from the plunge” caused by the COVID-19 pandemic,” the advisers said.
Japan’s tourism industry has been calling on the government to reopen borders to more visiting tourists, who served as a rare bright spot for the world’s third largest economy until the COVID-19 outbreak over two years ago.
Japan has recently eased entry curbs on business travellers and students as it lifted the daily cap for international arrivals, after it was criticised for strict border measures.