Japan Swings Back to Current Account Surplus

Increase due to higher shipment of vehicles to U.S.

Thanks to a stronger U.S. economy, Japan posted a current account surplus in February. This is a reverse from a record deficit in January although the figure was still down 30.7% on-year.

The latest reading, the broadest measure of Japan's trade with the rest of the world, was largely due to rising shipments to the key U.S. market, particularly vehicles, a positive sign for the world's third-biggest economy which is heavily dependent on overseas demand for growth, analysts said.

"Figures in January and February tend to swing for seasonal factors, such as the Chinese New Year (holiday)," said Satoshi Osanai, economist at Daiwa Institute of Research. "But a recovery from the Thai floods also helped Japan's current account to swing back to a surplus."

In February, Japan's current account stood at 1.18 trillion yen (US$14.48 billion), the finance ministry said. Overall, exports in the month were 2% lower, while imports grew 11.1% on soaring energy costs. Japan has had to steadily increase energy imports as utilities turn on thermal power plants while atomic reactors stay offline amid public opposition following the Fukushima nuclear disaster.

Japan's merchandise trade balance -- a key component of the current account -- came to a 102.1 billion yen surplus in February after four months in the red, the ministry said. That was still down 85.8% from a year earlier.

"Concerns over a stronger yen are receding gradually," Daiwa's Osanai said. "Risks now are soaring prices for resources and a slowdown of the global economy, which would make a recovery of Japan's manufacturing sector also slower."

In January, the country logged a record 437.3 billion yen current account deficit. That was Japan's first deficit since January 2009, when it posted a then-record shortfall of 132.7 billion yen at the height of the global financial crisis.

Copyright Agence France-Presse, 2012

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