Japan’s current account surplus rose 17.9 percent in 2004 from a year earlier to a record 18.59 trillion yen.

The Finance Ministry said Monday in a preliminary report that the surplus stemmed from a trade surplus with other Asian economies and the United States and a record-high surplus in the income account. The previous record was 15.77 trillion yen, set in 2003.

Private-sector economists predict the current account surplus will remain at high levels this year due to the steady growth of the world economy, especially growing demand from China, whose economy is projected to grow about 8 percent this year after expanding 9.5 percent in 2004.

“Japan is likely to continue having a trade surplus this year because of strong Chinese demand for Japan’s cutting-edge technology, as seen in machinery, electronics parts and cars, and high growth potential in the Asian economy overall,” said Tom Kirchmaier, a lecturer in international management at the London School of Economics and Political Science.

The current account balance — the broadest gauge of trade in goods and services — is the difference between a nation’s income from foreign sources and foreign obligations payable, excluding net capital investment.

Mamoru Yamazaki, chief economist at Barclays Capital Japan Ltd., generally agreed with Kirchmaier’s view. But he said he does not believe the current account surplus will grow substantially this year, citing lower growth rates anticipated for China and the U.S.

Yamazaki said that high crude oil prices are likely to keep inflating the value of imports, and that Japan is expected to increase imports once the economy overcomes the current pause in growth around midyear.

The Finance Ministry report shows that the balance of trade in goods and services posted a surplus of 10.16 trillion yen in 2004, up 21.6 percent.

The surplus in merchandise trade grew 16.7 percent to 14.31 trillion yen, with exports and imports both renewing record highs for the second straight year.

Exports climbed 12.3 percent to 58.31 trillion yen, and imports were up 10.9 percent to 44.00 trillion yen.

Exports have served as a key engine in Japan’s recovery. But their recent slowdown, along with inventory adjustment in the information-technology sector, has led to a pause in the recovery, creating a soft patch in the world’s second-largest economy.

The balance of services trade posted a deficit of 4.15 trillion yen, up 6.4 percent from the previous year.

The deficit was partly attributable to a 26.6 percent rise to 16.83 million in the number of Japanese traveling abroad in 2004, a ministry official said. The SARS epidemic had hurt overseas travel the previous year.

The income account, covering income from Japanese investments in foreign securities and payments by foreign employers in Japan, logged a record surplus of 9.27 trillion yen, up 12.0 percent from the previous year.

In December, Japan’s current account surplus came to 1.62 trillion yen, up 35.1 percent from a year earlier, the ministry report says.

The balance of trade in goods and services registered a surplus of 999.1 billion yen, up 14.0 percent, it said.

The surplus in merchandise trade grew 0.5 percent to 1.30 trillion yen, with exports up 8.5 percent to 5.13 trillion yen and imports up 11.6 percent to 3.82 trillion yen.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.