Japan’s Trade Surplus Falls in November : Imbalance May Hit $94 Billion for Year Despite Slower Auto Exports

Japan’s politically sensitive surplus in its overall trade balance shrank in November as motor vehicle exports fell a record 15.1% from the year-ago level, Japanese finance officials said Friday.

Japan posted a current account surplus of $8.14 billion in November--a drop of $139 million from October. This brought the current account surplus to $76.61 billion for the 11 months of calendar 1986. The officials said they fear that it will exceed $80 billion for the year.

(The current account measures not only trade in merchandise but also in services, primarily investment earnings, and transfer payments such as foreign aid.)

But economists at the Economic Planning Agency said Japan, which is trying to defend its economic polices against hostile trade partners, would still post a record surplus for fiscal 1986-87. Some predict an unprecedented trade imbalance of $94 billion in the 12 months to March 31, compared to a surplus last year of $61 billion.

The economists added that while a falling surplus might have benefits diplomatically, for Japanese industrialists it was an unwelcome reflection of stagnating growth at home.

Higher Value of Yen

This year’s record imbalance is, ironically, the result of a distortion in international trade accounting known as the J-curve, which means that the surplus continues to rise in dollar terms due to the higher value of the yen even while the export volume is slumping.

The surplus, a major cause of trade friction with other countries, reached a record $9.106 billion in September but then shrank to $8.283 billion in October. Although it was off from the previous month, the November total was far larger than a $4.518-billion surplus a year earlier.

A spokesman for the finance ministry said the current account surplus fell mainly because of a slowdown in exports, with November exports declining to $16.59 billion from October’s $18.87 billion.

The contractions were linked to the sharp rise in the value of the Japanese yen, which makes Japanese products more expensive to foreign customers and has caused trouble in export-oriented manufacturing industries. The strong currency also contributed to a 12% decrease from a year earlier in overtime hours worked in Japanese factories, the Labor Ministry said.

Leading the slowdown in exports were sales of motor vehicles.

The Japan Automobile Manufacturers Assn. said the decrease in exports of cars, trucks and buses in November to 516,928 vehicles was the sharpest year-to-year drop since the group adopted its current method of keeping records in 1979. It followed a 9.4% decline in October over the same month of the previous year and marked the fifth consecutive monthly decline.

The motor vehicle exports in November consisted of 356,612 passenger cars, 158,164 trucks and 2,152 buses, valued at $4.43 billion, up 11% from the same month of last year, the association said.

Four-wheel vehicle exports to the United States totaled 303,456 units, while 50,719 were exported to Europe and 31,063 to Southeast Asian countries.

Motorcycle exports in November declined 30.3% from a year earlier to 146,992 units, valued at $205.7 million, down 7.2% from the same month of last year, the association said.

In all, exports grew 8.1% to $16.590 billion from $15.322 billion in the year-earlier month but were down 12.1% from $18.865 billion in October of this year.

Ministry officials said exports of such products as videocassette recorders and cars fell because of government-led restraints on exports to the Common Market. Japanese manufacturers have been holding down shipments to Europe to forestall possible trade tensions.

Imports went down 19% to $8.086 billion from $9.973 billion a year earlier and dropped 20.4% from $10.146 billion in October. One reason was a decline in imports of gold, which had been purchased in large amounts to make coins to commemorate the 60th anniversary of Emperor Hirohito’s reign.

Japan’s overall balance of payments registered a record $9.33-billion deficit in November, exceeding the previous record of an $8.08-billion shortfall in October. A year earlier, the balance was in the red by $290 million.

The balance of payments is in deficit because of heavy purchases by the Japanese of foreign debt securities such as U.S. Treasury bonds, which count on the books as an import of an IOU. However, Finance Ministry officials said they could not explain why the deficit was so much higher than the month before.