Japan’s Current Account Surplus Shrinks 63% in July

Surprisingly robust imports helped shrink Japan’s current account balance of payments surplus, the broadest measure of trade in goods and services, by more than half in July, and economists say the trend could continue if oil prices rise further.

The Finance Ministry reported Friday that the current account, the widest measure of a nation’s trade in goods and services, shrank 63.27% to an unadjusted $2.02-billion surplus in July, from $5.50 billion a year earlier.

A Ministry of Finance official told reporters that Friday’s figures support the view that Japan’s current account surplus is in a declining trend, although there have been monthly variations.

Economists said robust imports and a surprisingly large deficit in invisible trade were responsible for the month’s sharp decline.

Within the overall current account, the merchandise trade surplus narrowed 22.9% to $5.42 billion from $7.03 billion a year earlier.

Imports rose 12% to $17.92 billion from $16 billion a year earlier. Economists attributed part of the gain to higher oil prices but said Japan’s insatiable appetite for foreign art also boosted the imports figure.

Indeed, the official said the ratio of imported manufactured goods to overall imports was 54.4% in July, a record after a former high of 52.4% in June, 1990.

Exports were $23.33 billion, against $23.03 billion a year ago, easing concern that Japanese industry was about to pour more products into nations already sensitive to trade imbalances.