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Current account surplus hit ¥4.29 trillion last year

Kyodo

The current account surplus marked a record low in fiscal 2012 as exports to China and Europe fell and fossil fuel imports rose, the government said Friday.

A record deficit in the global trade of goods and services of ¥9.48 trillion brought the annual current account surplus, one of the widest gauges of international trade, to ¥4.29 trillion in the year that ended March 31, the Finance Ministry said in a preliminary report.

The surplus, the smallest since officials started compiling comparable data in 1985, plunged 43.6 percent from the year before. The previous record low was ¥5.58 trillion, set in fiscal 1990 when crude oil prices spiked against the backdrop of the Persian Gulf crisis after Iraq invaded Kuwait.

Amid growing expectations of a recovery in exports with the yen sharply sliding, the government could be forced to map out measures to curb the outflow of financial assets as Japan imports more than 90 percent of its energy resources.

In fiscal 2012, exports fell 1.7 percent on year to ¥61.57 trillion, while imports climbed 3.6 percent to ¥68.47 trillion. The annual goods trade balance — exports minus imports — consequently fell into the red for a second straight year.

A downturn in the European economy, triggered by the eurozone’s sovereign debt crisis, has weighed on Japan’s exports to the region, while the territorial row over the Senkaku islets dragged down Japan’s shipments to China, its biggest trading partner.

Imports have been soaring, as demand for natural gas and oil has been increasing from utilities boosting fossil fuel-based power as an alternative to nuclear power since the Fukushima crisis.

Analysts said a weaker yen, driven down by Prime Minister Shinzo Abe’s push for bolder monetary easing by the Bank of Japan to beat deflation and by hopes of a U.S. economic recovery, could help exports rebound and improve Japan’s trade balance ahead.

The dollar topped ¥100 for the first time in more than four years in New York on Thursday after the release of better than expected jobless claims.

With the value of the yen declining, Japan’s trade deficit “is likely to shrink, which could help improve its current account balance,” said Tsuyoshi Ueno, a senior economist at NLI Research Institute.

A Finance Ministry official said the government will “monitor developments in economic conditions both at home and abroad, foreign exchange rates and prices of (liquefied) natural gas and oil,” noting the trade balance has a major impact on the account balance.