Tue, Feb 10, 2009 - Page 11 News List

Japan sees record fall in current account surplus

GLOOMY Affected by a sharp drop in exports, Japan’s current account surplus fell 34.3 percent last year, the biggest fall since comparable records began in 1986

AFP , TOKYO

Japan’s current account surplus shrank at a record pace last year as the economic crisis hit exports, while machinery orders fell for a third straight month in December, official figures showed yesterday.

Japan, the second-biggest economy in the world, has seen a slew of gloomy news in recent weeks as the global downturn crushes demand for its cars, electronics and other goods, deepening the country’s first recession in seven years.

The current account surplus dropped 34.3 percent last year from the previous year to ¥16.28 trillion (US$176.8 billion), the first fall in three years, the finance ministry said.

It was the biggest decline since comparable records began in 1986, a ministry official said.

The trade surplus alone plunged 67.3 percent last year to ¥4.03 trillion. Exports slipped 3 percent while imports rose 8.8 percent.

“The unprecedented decline resulted from a combination of a surge in oil prices in the early part of last year and a sizable drop in exports late last year,” said Hideki Matsumura, an analyst at Japan Research Institute.

In December alone, Japan’s current account surplus plunged 92.1 percent from a year earlier to ¥125.4 billion, as exports slumped 35.1 percent owing to weak demand from recession-hit overseas economies.

Japan logged a trade deficit of ¥197.9 billion for the month, against a surplus of ¥996.8 billion a year earlier.

“The impact of the global economic crisis is extremely big for countries like Japan, which relies heavily on trade,” Matsumura said, warning that Japan’s trade balance would likely remain in deficit for the time being.

The slump in exports has taken a heavy toll on Japanese manufacturers, many of which are now losing money and reducing jobs and investment in factories and equipment.

As a result, Japan’s core machinery orders, a key gauge of corporate capital spending, fell 1.7 percent in December from the previous month, the third consecutive month-on-month fall, the government said.

The core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, had already plunged 16.2 percent plunge in November.

The fall in December was smaller than the market’s average forecast for a 8.9 percent decline thanks to robust orders in the steel industry, which analysts said may have been placed by China.

But orders in the fourth quarter plunged 16.7 percent, and analysts said corporate capital spending was likely to remain weak.

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