Oil Imports Trim Japan Trade Gap

A surge in oil imports, robust domestic demand and a strong dollar helped narrow Japan’s trade surplus by a whopping 31% in August, and economists here say the trend should continue for the rest of 1989.

The government reported today that the customs-cleared trade surplus narrowed to an unadjusted $3.44 billion in August from $4.97 billion a year earlier, marking the fourth straight month the trade gap has shrunk.

“The underlying trend is continuing in the direction of (a reduction) of the Japanese external imbalance,” said Shoichi Enkyo, an economist at the Bank of Tokyo.

However, Japan’s sensitive trade surplus with the United States shrank only moderately to $3.03 billion from $3.24 billion a year earlier, as Americans continued their heavy purchases of autos and other Japanese-made consumer goods.

“If anything, it suggests that the U.S. economy is not quite as weak as people had thought,” said Peter Morgan, chief economist at Barclays de Zoete Wedd Securities.

Japan’s vehicle exports grew a surprisingly fast 4.7% on a rise in shipments to the United States, Europe and Asia, after year-to-year declines of 5.3% in July and 1.7% in June, Morgan said.

In the August period, the shrinking trade surplus was linked most directly to the stronger demand for higher-priced imported oil.