Japan Trade Surplus Triples in January

Japan’s politically contentious trade surplus more than tripled in January from the same month last year, according to data released today, refocusing attention on the nation’s slumping domestic economy.

The current account surplus, the broadest measure of trade in goods and services, soared 212.8% to $3.74 billion, the Finance Ministry said.

The surge underlined the fact that Japan’s weak domestic economy is not bringing in imports, said economist Kenji Arata at MCM Asia Pacific.

“Exports to Asia are certainly falling due to the crisis but so are imports--trade with the region in general is on the decline,” Arata said.

“Although exports to Asia have fallen, this is being offset by exports to the [European Union] and the United States.”

Finance Minister Hikaru Matsunaga acknowledged in parliament that the economy remains stagnant and “is in a very severe situation.”

Lehman Bros. Japan chief economist Russell Jones said the figures suggest that “the contribution from net exports to growth in the first quarter is likely to be weak--certainly much weaker than in the fourth quarter, when it was a strong positive, about the only strong positive, for growth.”

The January surplus was somewhat less than expected. Financial markets showed little immediate reaction.

A Finance Ministry official repeated the government’s contention that despite recent rises, the surplus in goods and services--the current account minus the income component--will not rise drastically in the medium to long term.

Peter Morgan, senior economist at HSBC Securities, agreed that the entire current account is probably “in the process of peaking out because of the Asia impact.”

Lehman Bros.’ Jones said non-trade items dragged down the current account figure, particularly the big service deficit.