The current account surplus was the smallest in 2014 since comparable data became available in 1985, with the trade deficit swelling thanks to a surge in gas imports and a weaker yen, government data showed on Monday.
The current account surplus, one of the widest gauges of international trade, fell 18.8 percent from a year earlier to ¥2.63 trillion last year, with trade in goods reaching a record deficit of ¥10.37 trillion, the Finance Ministry said in a preliminary report.
The current account surplus shrank for the fourth straight year as demand for natural resources grew from utilities bolstering fossil fuel-based power generation to fill a shortfall from idled nuclear reactors.
Exports gained 9.3 percent from the previous year to ¥74.12 trillion in 2014, but imports jumped 10.3 percent to ¥84.49 trillion. The goods trade balance — exports minus imports — stayed in the red for the fourth year in a row.
Imports rose sharply in the first three months of last year, as private spending and business investment expanded prior to the 3-percentage-point consumption tax hike to 8 percent on April 1, a ministry official said.
While the results suggested Japan’s overseas earning power was tepid in 2014, the current account balance is likely to improve as a recent plunge in global crude oil prices is expected to lower import costs and narrow the trade deficit, analysts said.
“If crude oil prices fall further, Japan’s trade balance may return to the black sooner than currently forecast,” which would increase the current account surplus, Masahiko Hashimoto, an economist at Daiwa Institute of Research, said in a report.
The benchmark contract of Brent crude oil futures has sunk by around 50 percent from a peak of about $110 in June.
The nation’s import costs would decrease by ¥7 trillion annually if crude oil prices remain at the present level, the Cabinet Office said late last month.
In 2014, imports of liquefied natural gas climbed 11.2 percent on year to ¥791 billion, but those of crude oil fell 2.6 percent to ¥367.9 billion, the Finance Ministry said.
The yen’s depreciation is set to shore up exports and income from foreign investment, also helping push up the current account surplus, experts said.
A falling yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, though it drives up import prices. The nation depends on imports for more than 90 percent of its energy needs.
The yen declined versus the U.S. dollar by 8.3 percent to 105.79 and versus the euro by 8.2 percent to 140.34 from the year before on an average basis in 2014, the ministry said.
During the same year, the surplus in the income account, which reflects how much Japan earns from its foreign investments, rose 9.7 percent to a record high of ¥18.07 trillion, buoyed by higher dividends and profits from securities investments on the back of the yen’s slide.
The services sector, including passenger transportation and cargo shipping, posted a deficit of ¥3.09 trillion last year.
The deficit in the travel balance contracted to ¥125.1 billion as the number of foreign travelers arriving in Japan soared 29.4 percent from a year earlier to a record 13.41 million.
In December alone, the nation registered a current account surplus for the sixth straight month, with the balance standing at ¥187.2 billion.
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