Surplus in ’11 logged biggest fall on record

Kyodo

Japan’s current account surplus logged the sharpest fall on record in fiscal 2011, as slower exports, growing imports, the strong yen and higher prices for crude oil and other commodities conspired against it, the Finance Ministry said Thursday.

The balance of payments, the widest gauge of a country’s international trade, totaled ¥7.89 trillion for the year that ended March 31, a 52.6 percent plunge from the previous year — the largest fall since comparable data became available in fiscal 1985.

The total surplus was also the lowest seen in 15 years, but would have been even worse if not for increased income from companies’ portfolio and foreign direct investment, the ministry said in a preliminary report.

Exports dropped 2.8 percent to ¥62.63 trillion, the first decline in two years, while imports surged 14.0 percent to ¥66.08 trillion, marking the second straight year of growth. The balance of trade in goods clocked a deficit of ¥3.45 trillion, the largest since data began to be compiled in fiscal 1972.

The yen’s surge to historic levels against the dollar and other major currencies last year blunted the competitive edge of major exporters, crippling automakers and high-tech manufacturers, while imports expanded on growing energy costs.

Utilities have increasingly imported liquefied natural gas and other fuel to boost their thermal power generation operations, as their nuclear reactors were gradually all idled due to the Fukushima nuclear disaster.

Against this backdrop, “the possibility of (the current account surplus) remaining lower than before the March 2011 natural disasters must be considered,” a ministry official said.

The yen’s appreciation eased somewhat over the last few months, but has regained ground in recent weeks as a safe-haven asset amid growing concerns about Europe’s sovereign debt crisis and its potential impact on the global economy.

The balance of trade in services, covering money transactions such as travel and transport payments, posted a deficit of ¥1.85 trillion but rose from ¥1.27 trillion the year before, the first expansion in four years on reduced revenue for marine transporters.

The services sector was also affected by a sharp fall in the number of foreign tourists in the aftermath of last year’s natural and nuclear disasters.

But the income account surplus, which indicates how much a country earns from portfolio and foreign direct investment, grew 13.3 percent to ¥14.29 trillion — the first jump in four years.

Record debt

The government’s debt reached a record high ¥959.95 trillion at the end of March, up 0.14 percent from three months earlier, the Finance Ministry said Thursday.

The total consisted of ¥789.34 trillion in government bonds, ¥53.74 trillion in borrowing mainly from financial institutions and ¥116.87 trillion in bills to cover short-term financing needs.