Japan’s current account surplus for May jumped 154.9 percent from a year earlier to 906.8 billion yen, posting the second straight month of increase, according to provisional figures released July 9.
As they have in the past, Finance Ministry officials said they do not foresee a continued trend of substantial rises, citing structural changes in the economy. The officials attributed the rise in May in part to the consumption tax increase in April.
“We still need to monitor future changes (in the surplus figures) to determine whether there has been a turnaround in its declining trend,” one official said. A further increase in the surplus could rekindle trade disputes with Japan’s major trading partners, in particular the United States.
Later in the day, Finance Minister Hiroshi Mitsuzuka echoed the assessment of ministry officials and said he believes the increase in the trade and services surplus is only temporary, because the nation’s economic structure is becoming more geared toward generating domestic demand. He also said he expects the effects of the April consumption tax hike on the current account surplus to wear off gradually.
The balance in trade and services for May came to a surplus of 412.8 billion yen. In May 1996, the figure marked a deficit of 104.1 billion yen. The trade surplus surged 118.6 percent on a year-on-year basis to 927.9 billion yen, spurred by a 20.2 percent increase in exports to 3.99 trillion yen, the 22nd straight month of growth.
Items that marked notable increases included automobiles, which registered growth of 43.2 percent in value and 27.7 percent in volume compared to May 1996, and steel, up 31.6 percent year-on-year. One reason for the surge in auto exports was that domestic car manufacturers delayed some of their exports until after April so they could respond to domestic demand before the consumption tax increase, ministry officials said. Exports of office equipment also increased by 24.3 percent.
Auto imports to Japan fell 16.3 percent in value and 15.7 percent in terms of volume, a situation ministry officials attributed to the sharp drop in domestic demand after the April tax increase. The nation’s deficit in the services balance shrank 2.6 percent in year-on-year terms to 515.1 billion yen due to factors such as a decline in the deficit for transportation services.