Japan’s Trade Surplus Falls, Fuels Concern for Recovery

Japan’s current account surplus rose in November, helped by returns from overseas investment, but the trade surplus declined further, underscoring fears that exports have been hit by the cooling U.S. and Asian economies.

The surplus in the current account, the broadest measure of trade in goods and services, rose 22.1% in November from a year earlier to $8.21 billion, the Finance Ministry said today.

The trade surplus fell 3.9% from a year earlier as growth in imports continued to outpace exports.

Overall, imports grew 12.8% in November from the previous year, largely due to a rise in crude oil prices. The figure outpaced the growth in exports of 9.2%.

“Japan’s trade surplus is on a gradual declining trend. Exports to the U.S., Asia and Europe have already peaked due to the slowdown in the global economy,” said Takehiro Sato, economist at Morgan Stanley Dean Witter.

An official at the Finance Ministry said the trend in the current account was unclear.

But Sato said a slowdown in import growth would likely keep surplus declines limited. “Since imports have also been decreasing, a decline in the trade surplus will stay gradual. The trend, nevertheless, will be for a fall,” he said.

Jitters over the world’s second-largest economy have grown because a deceleration in the U.S. economy is expected to eat into exports, one of the key growth areas for Japan’s tentative recovery.

The economy began to recover from its worst postwar downturn fueled by exports and gains in capital spending, thanks to a boom in the information-technology sector, but recent data have indicated that growth may have stalled.

Eroding confidence in Japan’s economic prospects has hurt Tokyo share prices and the yen, with the benchmark Nikkei average hitting 27-month lows last week and the dollar rising to fresh 17-month highs.