Japanese Current Account Surplus Hits $5.5 Billion

Japan’s current account surplus grew more than sixfold in August from a year earlier, mainly because of a reduced appetite for luxury goods from abroad, economists said Friday.

The unadjusted current account surplus--the broadest measure of trade in goods and services--soared to $5.48 billion in August from a surplus of $850 million in the same month a year earlier, the Finance Ministry said.

The unadjusted trade balance, the biggest component of the current account, roughly doubled from a year earlier to $8.25 billion.

“The $5.5-billion (current account) figure is somewhat larger than expected,” said Kusuo Aoki, an economist at Yamaichi Research Institute.

“A major reason is a decline in imports, particularly those that faded as Japan’s economic bubble burst.”

Imports in August fell to $15.96 billion from $17.88 billion in the same month a year earlier.

A slowing economy dampened Japan’s appetite for luxury items such as imported cars and costly art objects, thereby dulling the pace of imports, economists said.

The year-on-year decrease in imports also reflects large gold investments in 1990, they said.

The decline in imports may be temporary, however, since consumption and production remains healthy, a Ministry of Finance official told reporters.

Exports have increased because of a stronger yen that has boosted exporter prices in dollar terms, analysts said. The dollar traded on average at near 136.85 yen in August this year, against near 147.46 in August, 1990.

In addition, Japanese exporters have gradually shifted their emphasis away from the United States and more toward Europe to make up for slowing demand for goods in the United States, the analysts said.

Another factor adding to a wider current account surplus is a sharp increase in long-term capital flows, which stood at $11.84 billion compared to a deficit of $4.89 billion a year ago.

Yamaichi’s Aoki said increased investment by foreigners in Japan’s stock market was the main factor behind the jump in long-term capital flows.

Low levels of investment in foreign securities also beefed up long-term capital flows. Japanese investors have moved to take profits on Treasury holdings as the U.S. bond market appeared to be nearing its ceiling, an MOF official said.

The other major component of the current account, the so-called invisibles category, posted little year-on-year change in August with a $2.53 billion deficit.