The nation’s current account balance was in the black for the fourth straight month in May, standing at ¥522.8 billion, as imports slid for the first time in 19 months after the April 1 consumption tax hike cooled domestic demand, the government said Tuesday.
But the surplus in the balance — one of the widest gauges of international trade for a country — fell 7.7 percent from a year earlier as the slowing pace of the yen’s depreciation dampened growth in the income surplus, the Finance Ministry said in a preliminary report.
Imports declined 0.4 percent from the same month last year to ¥6.395 trillion against a backdrop of falling imports of crude oil, while exports climbed for the 15th consecutive month, up 2.0 percent on year to ¥5.719 trillion, on the back of an expansion in shipments of metalworking machines.
The balance of goods trade came to a deficit of ¥675.9 billion, shrinking by ¥137.9 billion from the previous year.
The surplus in the primary income account, which reflects how much Japan earns from its foreign investments, fell for the second straight month, down 3.2 percent to ¥1.478 trillion, as dividends from foreign direct investment decreased with the effects of the weaker yen petering out.
The nation’s current account deficit had been widening on robust demand for gas and oil from utilities as they bolster fossil fuel-based power generation to offset the loss of nuclear power stations in the aftermath of the Fukushima atomic crisis, analysts said.
The consumption tax hike to 8 percent from 5 percent, however, may continue to stifle private spending at home, preventing imports from growing further, which could reduce the nation’s trade deficit and in turn expand the current account surplus, they said.
Koya Miyamae, senior economist at SMBC Nikko Securities Inc., said Japan’s current account balance “is likely to return to a clear path” toward improvement if exports gain steam, since the global economy, and in particular that of the United States, is bouncing back.
In May, the services sector, including passenger transportation and cargo shipping, posted a deficit of ¥68.2 billion.
Also in May, the number of foreign passenger arrivals in Japan rose 25.3 percent from a year before to 1.10 million, while that of Japanese going abroad increased 0.9 percent to 1.28 million.
Fees that foreign companies paid to Japanese companies for the use of intellectual property totaled a record ¥481.0 billion.
The yen dropped against the dollar by 0.7 percent year on year in May to an average of ¥101.08 and the euro by 6.7 percent to ¥131.05.
A falling yen usually props up exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, though it drives up import prices. Japan depends on imports for more than 90 percent of its energy needs.