Japan's current account surplus sank 4.2% in first half amid weak exports

Japan’s current account surplus shrank in the first half as exports to Asia turned sluggish amid ongoing trade tensions between the United States and China, government data showed Thursday.

The surplus in the current account, one of the widest gauges of international trade, stood at ¥10.47 trillion ($98.73 billion), down 4.2 percent from a year earlier, the Finance Ministry’s preliminary report said.

Among the key components, the surplus in goods trade plummeted 87.4 percent to ¥224.2 billion as exports of chip-making equipment to South Korea and of steel and auto parts to China were fell sharply from January to June.

Since Japan decided to review its preferential trade treatment of South Korea in July, its impact was not reflected in the reporting period, a ministry official said.

Exports fell 5.2 percent from a year ago to ¥37.95 trillion while imports edged down 1.4 percent to ¥37.73 trillion.

In the meantime, primary income, which reflects returns on overseas investments, helped the world’s third-largest economy stay in the black with a surplus of ¥10.59 trillion, up a slight 0.2 percent for the second-highest result on record.

Services trade, which includes cargo shipping and passenger transportation, logged its first surplus on a half-year basis with ¥231.6 billion, helped by an increase in tourism and a decline in research and development costs at companies’ bases abroad. This marked the first black ink on a first-half basis since comparable data became available in 1996.

The current account surplus in June alone was ¥1.21 trillion, keeping it in the black for 60 consecutive months. That compared with a median forecast of a ¥1.18 trillion by 19 economic research institutes surveyed by Jiji Press.

Goods trade logged a surplus of ¥759.3 billion, down 7.8 percent from the year before, while the services trade ran a surplus of ¥50.9 billion, and primary income a surplus of ¥427.3 billion.