Current account surplus declined 37% in half
Written by Writer on Wednesday, November 12th, 2008
Current account surplus declined 37% in half
The April-September current account surplus fell 37.0 percent from a year earlier to ¥7.856 trillion as record-high imports of crude oil outpaced exports, the Finance Ministry said Tuesday.
It was the first decline in six half-year periods.
For September alone, the surplus fell 48.8 percent from a year earlier to ¥1.498 trillion, down for the seventh straight month, as imports led by oil and other natural resources far outpaced slowing exports amid the credit crunch.
In the first six months of fiscal 2008, which began in April, the surplus in the balance of trade in goods and services plunged 89.8 percent from a year before to ¥492.4 billion, the ministry said in a preliminary report.
The surplus in merchandise trade fell 74.8 percent for the second straight half-year decrease, to ¥1.588 trillion, the smallest surplus since comparable data became available in the first half of fiscal 1985, according to the ministry.
Exports grew only 3.1 percent to ¥40.988 trillion, up for the 13th consecutive half-year period, with gains in exports to the rest of Asia offsetting decreases in shipments to the United States and Europe, hard-hit by the subprime meltdown.
Imports advanced 17.8 percent to a record ¥39.4 trillion, up for the 12th straight six-month period, with a 60.5 percent jump in crude oil imports.
The balance of services logged a deficit of ¥1.096 trillion, down 25.9 percent from a year earlier. Deficits narrowed in the tourism and transport sectors, with Japanese travelers paying less overseas and domestic cargo transporters receiving more fees.
The income account, covering income from Japanese investment in foreign securities and payments by foreign employers in Japan, saw a 2.9 percent fall in its surplus to ¥7.986 trillion, with falls in income from dividend payments and interest on bonds.
The ministry said the income surplus for a six-month period exceeded the current account surplus for the first time, underlining the growing weight of investments as profit earners rather than exports.
Hirokata Kusaba, senior economist at Mizuho Research Institute, said declines in the trade surplus were especially sharp in the July-September quarter due to slow exports and soaring imports, and the balance may have reached bottom.
Looking ahead, Kusaba indicated he expects the trade surplus will grow with expected plunges in crude oil prices, but the income surplus will suffer a major setback with dividends from overseas investment and profits earned by Japanese subsidiaries abroad diminishing amid the global market turmoil.
“The income surplus will also be negatively affected by the yen’s recent surges against other major currencies, with declines in overseas investment gains in yen terms,” Kusaba said. “Interest payments on bonds will also decrease as major central banks have cut their key rates.”
The Mizuho Research economist projected that the current account surplus is likely to keep shrinking from year-earlier levels for the time being.
In September, the balance of trade in goods and services plummeted 94.0 percent from a year before to a surplus of ¥96.1 billion, with a sharp drop in the merchandise trade balance.
The surplus in merchandise trade plunged 86.0 percent to ¥247.1 billion.
The Japan Times
Wednesday, Nov. 12, 2008
