Japan’s Current Account Surplus Declines Again

Japan’s current account surplus shrank for the ninth straight month in August, government data showed today, underscoring concerns that a worldwide economic slowdown is pushing the groggy economy further down.

The Ministry of Finance said the surplus, the broadest measure of trade in goods and services, fell 27.1% in August from a year earlier to $5.84 billion.

Japan’s trade surplus shrank 37.3% to $4 billion as a decelerating global economy, particularly in the high-tech sector, hit the world’s second-biggest economy.

“It is difficult to see the decline in the current account surplus halting,” said Shinichi Sato, senior economist at Tokyo-Mitsubishi Securities.

Economists expect Japan’s balance of payments to take a further hit in September as terror attacks in the U.S. severely disrupted air traffic and business activity for days.

“The attacks will have likely accelerated the fall in exports,” Sato said.

This would be bad news for export-dependent Japan. If Japan’s gross domestic product shrank again in the third quarter, as seems likely after a 0.8% contraction in the second quarter, the country would technically go into its fourth recession in a decade.

A Ministry of Finance official said a 2.9% drop in imports, the first decline in 22 months, probably was due to a slowdown in domestic aggregate demand.

“Imports had been falling on a volume basis for some time now, but a weaker yen had been keeping the yen-based total rising. This time, however, the weakness of the domestic economy has overshadowed that price factor,” the official said.