Slide in Japan Trade Surplus Continues; Off 8.5% in March

With spending on imports and travel rising, the surplus in Japan’s broadest measure of trade fell 8.5% in March, continuing a trend that began in 1994, the government said Monday.

The Ministry of Finance also reported that the current account surplus fell 24% for the fiscal year ended March 31, marking the third straight year of decline.

With the exception of one month--July 1995--Japan’s current account surplus has been shrinking since December 1994. Continuing efforts to move production overseas and the surging value of the yen have led the reduction. The high yen forces exporters to raise prices overseas, making their products less competitive.

Japan’s surplus in its current account, which measures the value of the merchandise, services and investment that flow in and out of the country, fell in March to $12.03 billion at current exchange rates from $13.14 billion in March 1995.

Imports continued to grow faster than exports.

By one measure, based on settled contracts, the merchandise portion of the current account surplus fell 7.1% to about $13.04 billion. By a more widely quoted measure, taken as goods clear customs, the merchandise trade surplus fell 23% to $10.69 billion in March.

As in previous months, the March rise in imports was led by semiconductors, computers, petroleum products and automobiles. The value of crude oil imports, which account for a large portion of Japan’s overall imports, edged up 3.6% as oil prices rose.

On other measures of its current account, Japan’s deficit in services continued to grow, in part reflecting increased spending by Japanese nationals overseas.

The deficit in service trade increased to $4.69 billion from $4.09 billion in March 1995.

The surplus in income grew 20%, reflecting increased returns from investment overseas.

For the entire fiscal year, the current account surplus shrank to $90.14 billion from $118.36 billion in the previous year.

The government data do not break down the surplus by country.

The U.S. government has reported that its trade deficit with Japan fell to $59 billion in calendar year 1995 from an all-time high of $66 billion in 1994.