Business / Economy

Japan's current account surplus shrinks to ¥2.08 trillion in February

Kyodo

Japan reported a current account surplus of ¥2.08 trillion ($19 billion) in February, with the figure having shrunk from a year ago due to a smaller trade surplus and a stronger yen, government data showed Monday.

Despite a 28.7 percent drop in the current account surplus the country managed to stay in the black for the 44th straight month, as the nation continued to benefit from strong earnings from foreign investment.

Japan had a trade surplus of ¥188.7 billion, down 82.5 percent, the Finance Ministry said in a preliminary report.

The shrinkage came as China’s Lunar New Year holidays began — in mid-February this year, later than in 2017. Exports to China, a major trading partner for Japan, tend to decrease while imports gain around the holidays.

Imports surged 17.8 percent to ¥6.23 trillion amid robust demand for clothes and energy. Led by increased shipments of cars, exports rose 0.9 percent to ¥6.42 trillion, the ministry data showed.

The surplus in the primary income account, which reflects how much Japan earns from foreign investment, stood at ¥1.95 trillion, down 2.7 percent.

Since the beginning of the year, the yen has been gathering strength. The U.S. dollar averaged ¥107.82 for the reporting month, down from ¥113.06, according to the ministry. Appreciation in the yen cuts into foreign investment returns.

Economists say Japan’s current account will likely stay in the black in coming months but some express concern about a further rise in the yen. They also note fears of a trade war between the United States and China, which have roiled global financial markets.

“Exports appear to have struggled in recent months. The global economy won’t deteriorate suddenly but it may be difficult for (Japan’s) exports to gain sharply going forward, which would weigh on the country’s trade surplus,” said Toru Suehiro, a senior market economist at Mizuho Securities Co.

Financial markets have been surprised by Trump’s moves to impose tariffs “but we need to see whether China’s robust economic growth will continue,” Suehiro said. “It could become another risk factor.”

The travel surplus expanded to ¥178.3 billion from ¥98.1 billion a year ago as the number of foreign visitors to Japan jumped 23.3 percent from a year earlier to 2.51 million in February, a record for the month.