Japan’s Trade Surplus Surges 17% in Month

Japan on Friday reported that its trade surplus in goods and services climbed 17% in February to $7.71 billion, but economists and government officials said the surge was out of line with the basic trend.

The merchandise trade surplus also leaped 26% to $9.02 billion in February from $7.15 billion a year earlier.

“It’s true that the trade surplus is growing a bit, but February’s figure is not representative of the general trend,” said Ayako Yamaguchi, economist at Bank of Tokyo Ltd. “The figure was unusually large.”

The surpluses shot upward because of a near-halt in the growth of imports, which were up only a meager 1.8% in February to $12.97 billion, economists said.

On the other hand, exports grew at a strong 10.5% rate to $22.00 billion, helping swell the trade imbalance.

Slow Domestic Activity

A Finance Ministry official said the sudden jump in the trade surplus should not be taken as an indication that the process of improvement in Japan’s trade imbalance was coming to a stop.

He said the ministry expects a reduction in the surplus to begin soon and first 20-day March customs-clear trade figures showed that imports are picking up substantially.

“Although the current account surplus widened, it should reverse reasonably soon,” said David Gerstenhaber, economist at Morgan Stanley International Ltd.

Toshiaki Kakimoto, chief economist at Sumitomo Bank Ltd., said the small rise in imports reflected slow domestic economic activity prior to the late Emperor’s funeral at the end of February and aircraft purchases the previous year, which helped make import growth look stunted this year.

“Imports have not suddenly come to a halt. They will continue to grow,” Kakimoto said. But it is still necessary for Japan to deregulate and free its markets, he added.

Flagging oil imports and the extra day in February last year due to leap year also helped depress import growth, Gerstenhaber said.

The dwindling of import growth hit the February trade figures hard, but imports should be coming back up soon because domestic demand is still increasing and prices and volumes of oil purchased by Japan are rising, he said.