The nation's surplus in merchandise trade in fiscal 1998 rose 23.1 percent from the year before to 14.1 trillion yen -- the second-largest figure ever after the 14.4 trillion yen surplus in fiscal 1986 -- with a decline in imports outpacing declining exports.

However, the rate of increase dropped every quarter in the year to March 1999, from 46.3 percent to 3.6 percent, the Finance Ministry said in a preliminary report released Wednesday.

The politically sensitive trade surplus with the United States rose 23.5 percent in fiscal 1998 to 6.69 trillion yen, the second consecutive yearly rise and the largest surplus since the 7.11 trillion yen surplus in 1987.

Overall imports fell 11.5 percent to 35.35 trillion yen, the first decrease in five years.

Exports slipped 3.8 percent to 49.45 trillion yen, also the first decline in five years.

Electronic parts exports dropped 11.2 percent and office equipment 6.2 percent.

The value of crude oil imports plunged 32.4 percent, mainly because the unit price fell 28.9 percent. Lumber imports tumbled 32.4 percent.

In March alone, the overall customs-cleared trade surplus rose 7.5 percent to 1.33 trillion yen, after a 26.6 percent decrease the previous month.

March exports fell 6.2 percent to 4.31 trillion yen for the sixth consecutive monthly drop. Imports were down 11.3 percent to 2.97 trillion yen, the 15th straight monthly decline.

The overall rate of growth of the trade surplus will probably continue to slow, a ministry official said, in part because exports to the U.S., Europe and Asia have been declining and a large increase in the near future is unlikely.

The ongoing relocation of production facilities from Japan to other countries helps to reduce exports and increase imports, the official said, adding that a series of economic stimulus measures should boost domestic demand and thus imports.

In fiscal 1998, the yen averaged 128.46 to the dollar, down 4.6 percent from fiscal 1997. A weak yen lowers the price of Japanese products sold overseas.

Exports began to decline in the October-December quarter, falling 10.2 percent on a year-on-year basis. In that period, exports to the U.S. fell 1.7 percent.

Exports to the 15-member European Union shrank 2.6 percent in the January-March period. Exports to Asia fell by double digits in all four quarters.

In March, the trade surplus with the U.S. soared 29.1 percent to 570.3 billion yen, the first expansion in three months. Exports decreased 3.6 percent, but imports fell 19.9 percent.

Exports of iron and steel to the U.S. -- the biggest source of trade union anger there -- plunged 57.9 percent.

The trade surplus with Asia in fiscal 1998 decreased 9.8 percent to 418.2 billion yen, with exports down 7.9 percent and imports off 7.1 percent. But imports of office equipment, such as parts for personal computers, jumped 24.9 percent.

The trade surplus with the EU dropped 6.3 percent to 332.1 billion yen, with exports falling 3.6 percent and imports 1.5 percent. Alcohol imports, mainly wine, plunged 28 percent, presumably because there was a flood of imports the year before, the ministry official said.