U.S.-JAPAN TRADE : Surplus Continues to Widen : Pacific Rim: Japan’s trade gap with United States grows to $25 billion for first six months of 1995.

Japan’s trade surplus shrank in the first half of 1995, but its politically sensitive trade gap with the United States continued to grow, the government reported Monday.

However, the June surplus with the United States slipped to $4.19 billion from $4.74 billion a year earlier.

The Finance Ministry said Monday that the nation’s overall customs-cleared trade surplus fell nearly 4% to $57.42 billion in the January-to-June period from $59.77 billion in the same period a year earlier.

The data was not adjusted for seasonal factors.

Measured in yen terms, the surplus in June alone fell a steep 16.6%, to 985 billion yen.

The nation’s politically sensitive trade surplus with the United States, however, rose to $25.15 billion--a record for the January-June period--from $24.52 billion a year ago.

In June alone, the nation’s unadjusted trade surplus overall grew to $11.57 billion from $11.34 billion in June, 1994.

A Finance Ministry official attributed the drop in the June surplus with the United States to a fall in Japanese luxury car exports to America due to Washington’s threat to slap 100% punitive tariffs on such cars if the two sides failed to forge a deal on foreign access to Japan’s automotive market. The sanctions were averted by a last-minute pact.

Economists said Japan’s trade surplus will likely continue on a downward path, although the yen’s rise earlier this year will delay its drop in dollar terms, economists said.

“From around spring 1996, we expect the trade surplus to shrink in dollar terms, though for the rest of this calendar year the impact of the yen’s rise will remain,” said Shigeru Saito, an economist at Daiwa Research Institute.

“We think the dollar is moving towards around 90 yen, so . . . the impact of the J-curve will start to disappear.”

In the J-curve effect, the yen’s rise boosts the dollar value of Japanese exports, resulting in a temporary inflation of the surplus measured in dollars before the stronger Japanese currency dampens exports by making them less price competitive.

Economists said exports were relatively robust in the first half of 1995 but will suffer as the U.S. economy slows down.

Imports, meanwhile, will also keep growing despite Japan’s sluggish domestic economy.

“Companies seeking to cut costs are buying more, cheaper foreign products, and those which have moved production offshore are importing those goods back to Japan,” a Nikko Research Institute economist said. “Consumers have reconfirmed their awareness that imports are cheaper and within the distribution system the trend is to increase sales of imports including foodstuffs.”

The current account surplus, which includes trade in services as well as goods, generally moves in line with the customs-cleared surplus. The current account surplus was 2.8% of the gross domestic product in 1994-95 to March 31 and is expected to shrink to at least the government forecast of 2.4% in 1995-96.

“They should be able to reach their target without making any efforts at all,” Saito said.