Japan Tells Trade Surplus Drop of Nearly 15% in ’89

Japan’s trade surplus plunged by more than 15% last year as imports soared, but economists said further progress in 1990 will be hard to achieve.

The Finance Ministry said today that the surplus dropped to $64.4 billion last year from $77.6 billion in 1988.

That was the smallest surplus since 1985 and represented a much bigger decline than most economists had expected.

Imports rose more than 10%, helped by higher oil prices and strong domestic demand, while exports grew a scant 4%.

“Japan’s efforts to increase imports of manufactured goods and production of Japanese products abroad, such as automobiles, have begun to bear fruit,” Vice Finance Minister Sadaaki Hirasawa told a news conference. “The overall situation is moving in a favorable direction.”

But the figures did not look nearly so good for trade with the United States, Japan’s biggest trading partner and a constant critic of its trade policies.

Japan’s surplus with the United States edged down to $45 billion in 1989, from $47.6 billion in 1988.

“Unless both sides are very cautious and careful not to act too irrationally, the relationship between Japan and the United States will be a very tough one this year,” said Noboru Hatakeyama, a senior Japanese trade official.

Private economists agreed and said Japan will be hard-pressed to cut either its global surplus or its surplus with the United States by much this year.

Some of the special factors that helped cut the surplus last year--such as high oil prices and the weak yen--are not likely to have as big an impact in 1990, they said.

Besides oil, the biggest import successes last year included cars and liquor, two products that benefited from changes in tax laws, and the growing affluence of the Japanese.