Japan Trade Surplus Dips 2% in ’88 : But Upward Trend Is Indicated by Steep December Rise

Japan said today that its trade surplus in December was nearly $1 billion more than the same month in 1987, but for the year slipped 2% to $94.79 billion.

The December trade surplus rose to $10.93 billion from $9.96 billion in the year-earlier month, the government said.

The broader-based December current account surplus, which includes trade in both goods and services, fell to $9.27 billion from $9.44 billion in the year-earlier month. This was still above the previous month’s $6.76 billion.

For the whole year, Japan’s trade surplus in goods and services fell nearly 9%, but economists see little hope for any cut in the surplus in 1989. The United States and Japan’s other trading partners have been pressuring Tokyo to bolster its domestic economy in order to stoke demand for imported goods.

The current account surplus fell to $79.49 billion in 1988 from $87.02 billion the previous year, the Finance Ministry said. But this was still much higher than most people expected, said economist Soichi Enkyo of Bank of Tokyo.

Pace Has Slowed

“The figures clearly show the pace of improvement has slowed down.” He forecast that Japan’s 1989 current account surplus would edge up to $80.5 billion, and said the trade surplus could rise to $97.4 billion, which would surpass 1987’s record $96.39 billion.

Although Japanese companies have had to deal with the strong yen over the past few years, they have now adapted and can sell more goods abroad, said economic forecaster Seiji Nagano of Yasuda Trust and Banking.

“Japanese industry has now recovered its competitiveness,” he said. This would spur more exports this year and that upward trend could be even further propelled by a weakening of the yen, he added. The dollar has gained about 8 yen over the last month and now trades at around 129 yen.

But the yen’s slightly weaker buying power could also dampen import growth and further exacerbate Japan’s trade surplus situation this year, Nagano said.

Enkyo said the rapid expansion of imports last year reflected to some extent a gain from a low level of goods entering Japan.

“From a low level, the growth in percentage terms looks very high. This year growth starts from a higher level so the pace naturally slows,” he said.

Imports grew 28.5% in 1988 to $164.77 billion. Exports rose a smaller 15.6%, but that still took them to $259.56 billion, far above imports.