The July current account surplus surged 62.7 percent compared with the previous month to 9.06 billion yen, according to preliminary figures released by the Finance Ministry on Sept. 11.
The figure marked the fourth consecutive month in which the surplus rose, almost guaranteeing that it will be a key topic at the meeting of the finance ministers and central bankers of the Group of Seven industrial nations in Hong Kong next week.
Senior U.S. officials such as Treasury Secretary Robert Rubin have recently indicated that they want Tokyo to abide by its commitment to secure domestic-demand led growth and keep external surpluses from rising considerably.
The total balance for trade and services for July came to 474.2 billion yen in Japan’s favor, a 421.6 percent increase from the same period last year.
Finance Ministry officials acknowledged that the trade and services surplus has been growing in recent months, but reiterated that structural changes in the economy will prevent the figure from rising substantially in the long term.
The ministry maintains that domestic firms’ moves toward overseas production and the rise in imported goods has made the nation’s industrial structure one where large surpluses are unlikely.
“While it is a fact that the surplus has grown during the past few months, we do not believe that this trend will remain unchanged,” a ministry official said, adding that authorities will continue to closely monitor developments.
A weaker yen and the dampening effect of the two-percentage point consumption tax hike that began in April were seen as key factors behind the rise in the surplus during the past few months.
Exports for the month rose 12.1 percent to 4.17 trillion yen, overshadowing the scant 3.3 percent growth in imports to 3.12 trillion yen. Exports logged year-on-year growth for the 24th straight month, while imports increased for 36 consecutive months. As a result, the trade surplus stood at 1.04 trillion yen, a rise of 50.5 percent compared with the same period last year.
Auto exports increased by 32.3 percent in value and 28.1 percent in volume compared with the same period a year ago. Notable increases were also seen in exports of office equipment and electronic parts, such as semiconductors, which grew 10.3 percent and 8.8 percent, respectively.