Takahiko Wada
[Tokyo 9th Reuters]-The deterioration of Japan-Korea relations has emerged as a factor pushing down Japan's current account surplus. Due to the worsening relationship between the two countries, such as strengthening export control of semiconductor materials, regular flights between Korea and Japan have been suspended. The number of tourists from South Korea has decreased, and downward pressure has been put on the travel balance, which is one of the components of the current account balance. In the Kyushu region, where many Korean tourists have been accepted, discussions to diversify tourists and increase consumption are in full swing. The BOJ's policy is to carefully look at the impact of the Japan-Korea conflict on the real economy.
<Current account surplus toward September>
According to the July balance of payments statistics released by the Ministry of Finance on the 9th, the current account balance was 1,999.9 billion yen, surpassing the previous month's 1,2111.2 billion yen. However, the current account balance after seasonal adjustments was 1,647 billion yen, and the surplus decreased from 1,941.9 billion yen last month.
SMBC Nikko Securities' senior economist Kōya Miyamae expects that the current account balance on a seasonally adjusted basis will tend to shrink the surplus toward September. “While imports will increase due to rush demand before the consumption tax hike, exports will decline due to trade friction between the US and China, and the current account surplus is expected to shrink.” Imported goods are subject to consumption tax, not limited to items.
<Shadow of conflict between Japan and Korea>
In addition to this, it is likely that one of the reasons for the current account surplus will be the prolonged conflict between Japan and Korea.
July, when the Japanese government became more confronted by strengthening export control of semiconductor materials for Korea. According to the Japan National Tourism Organization, the number of tourists visiting Japan from South Korea decreased by 8.2% from the previous month to 561,000 (estimated). Tourists from South Korea account for about 20% of the total.
The impact on the current account balance in July was negligible, but according to SMBC Nikko Securities, the seasonally adjusted value of the travel service balance was 190 billion yen, and the surplus decreased from 220 billion yen in June. Due to a decrease in visitors from South Korea, “receipt” of accommodation and restaurant expenses decreased. On the other hand, the “payment” of Japanese overseas travelers has decreased, so the reduction has been modest.
<Direct hit Kyushu economy>
The economic impact of the Japan-Korea conflict is manifesting mainly in the Kyushu region. South Korea has the highest number of foreign guests according to nationality announced by the Japan Tourism Agency in 6 of the 7 Kyushu prefectures except Kagoshima Prefecture, which is easily affected by the deterioration of the relationship.
South Korea's cheap airline, Tway Airlines, has been suspended from Saga-Busan and Saga-Seoul flights from August 19. The suspension of the Saga-Busan route was originally from September 17, but the suspension was delayed by one month due to worsening than expected in relations between Japan and Korea. The Saga Airport Division says that although it is in close contact with the airline, there is no prospect of resumption.
In Saga, South Korea accounts for 52% of foreign guests, and the suspension of scheduled flights is painful as it has a presence as a “foreign country that is close and easy to go” (related to Saga Prefecture) for Korean people. It is. The Saga Prefecture Tourism Division pointed out that it is necessary to diversify the nationality of tourists and increase consumption. We will discuss measures at the prefectural assembly starting on the 10th.
<Risks associated with prolonged conflict>
The Bank of Japan is also paying attention to these moves. At the press conference in Kumamoto City in August, Mr. Suzuki, the deputy committee member, commented on the impact of the worsening relations between Japan and South Korea. It seems to have decreased, "he pointed out. “If this happens for a long time, the impact could be expressed in numbers that cannot be specifically ignored,” he said.
Takeshi Nakamura, branch manager of the Bank of Japan and Kumamoto branch, who attended the conference, said that he wants to carefully check the impact on the real economy.
(Editor: Hitoshi Ishida)