Japan’s trade surplus in July more than doubled from the year before as exports surged and imports shrank, the Finance Ministry said Friday.
Japan’s unadjusted current account surplus--the broadest measure of trade in goods and services--hit $5.04 billion last month, up from $1.93 billion in July, 1990.
Analysts expect the trend to continue.
“We’ll have negative import growth throughout the rest of the year,” said Paul Summerville, chief economist at Jardine Fleming Securities Ltd. “You ain’t seen nothing yet.”
Economists said the big July surplus increase, the fourth straight month in which it has risen, would spark concern of heightened friction with trading partners.
“There are factors in sight pointing to an expanding surplus, there’s concern over its future,” a Finance Ministry official told reporters after the data was released.
The trade surplus rose 62.4% to $8.64 billion in July from $5.32 billion a year earlier.
A ministry official said a heavy drop in gold imports helped boost the trade surplus by nearly $2 billion in July.
Gold imports soared last year as Japanese brokerages set up gold investment funds.
Overall imports fell 5.4% in July, mainly because of lower Japanese demand for luxury cars and for art.
Imports totaled $17.10 billion compared to $18.08 billion in July, 1990. It was the third straight month of year-on-year import decreases.
Exports rose by 10% to $25.74 billion, against June’s $24.77 billion and $23.40 billion a year ago.
Active Japanese direct investment in Asia and strong demand in Europe led to booming exports of capital goods such as machine tools, semiconductors and electronics.
“Japanese products are really competitive. There’s little chance that overseas demand will be weakened,” said Tasushi Shikano, economist at Yamaichi Research Institute of Securities and Economics.
Japan has been under heavy political pressure from the United States, the European Community and other trading partners to cut its surpluses.
Economists said, however, that though there might be monthly dips in the current account surplus, the overall trend is for a continuing gradual rise.
To trigger a dramatic cut in Japan’s trade surplus, economists said, imports will have to grow much faster than exports. As long as imports grow only modestly as at present, the trade surplus will keep expanding, they added.
Import growth should weaken in coming months because oil prices are lower now than they were a year ago when they soared because of the Gulf War.
However, exports to the United States, Japan’s harshest critic on trade, are likely to stay at relatively low levels for a while due to the weak U.S. economy and increased overseas production by Japanese firms, economists said.
The strength of the yen against other currencies compared to last year was also a factor behind the widening trade surplus, the ministry official said. A stronger yen inflates the value of Japan’s exports when denominated in dollars, pushing up total export earnings.
Japan’s invisible trade deficit, which includes capital flows from tourism, narrowed to $2.75 billion from $3.04 billion a year ago.