• Kyodo News


The current account surplus fell at a record pace in fiscal 2008, hit by plunging exports amid the global recession, the Finance Ministry said Wednesday.

The surplus was down 50.2 percent from a year earlier to ¥12.23 trillion, shrinking for the first time in seven years, the ministry said in a preliminary report.

The decline is the largest since the ministry started releasing balance of payments figures under the current format in 1985.

The balance of trade in goods and services also fell into the red for the first time on record, posting a deficit of ¥1.003 trillion, compared with a surplus of ¥9.09 trillion in fiscal 2007.

The latest report indicates just how vulnerable the economy is to a slump in overseas demand.

Japan had a record surplus in its current account for five straight years through fiscal 2007. The current account is considered the broadest measure of trade in goods and services with the rest of the world.

In March alone, the current account surplus dropped 48.8 percent from a year earlier to ¥1.49 trillion, marking the 13th straight monthly decline in the balance of payments.

Experts believe Japan is unlikely to register a large surplus in its current account anytime soon, but some predict that exports will pick up at a gradual pace in the coming months.

“We forecast that exports will slowly recover from this fiscal year,” said Atsushi Matsumoto, a researcher at Mizuho Research Institute, noting there are signs of improvement in consumer sentiment in major economies, including China and the United States.

“A big surplus is unthinkable,” he said. “But Japan’s current account surplus could register double-digit growth in fiscal 2009 as a fall in crude oil prices will likely lead to a cut in the total import value.”

For all of fiscal 2008 through March 31, the surplus in merchandise trade plunged 90.0 percent to ¥1.17 trillion, the smallest amount on record.

Exports for the 12-month period fell a record 16.3 percent to ¥67.72 trillion as the global economic crisis sapped demand for the nation’s automobiles and high-tech products. Imports contracted 3.9 percent to ¥66.55 trillion.

But the deficit in the services account, including payments in transport and tourism, shrank to ¥2.17 trillion from ¥2.6 trillion in fiscal 2007, falling for the first time in three years, partly because a sharp rise in fuel surcharges discouraged overseas travel.

The income surplus narrowed for the first time in six years to ¥14.56 trillion, compared with ¥16.75 trillion in the previous fiscal year, with returns received by firms and individuals from overseas investment declining.

The current account balance is the difference between a country’s income from foreign sources and foreign obligations payable, excluding net capital investment.

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