Japan: record low in current account surplus
Published 13 May 2014
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0.1 Summary
Japan’s FY2013 Current Account surplus falls 81% and, at £4.6bn, is the lowest ever. The record trade deficit drags down the annual surplus despite a strong income surplus. March 2014 reports a surplus despite strong imports as consumers sought to make purchases ahead of April’s VAT rise.
0.2 Detail
Japan’s Current Account figures released on 12 May show a 789.9bn Yen (£4.6bn) surplus in FY2013. This is the lowest recorded since 1985 (when comparable data became available). Falling 81% compared to FY2012, it is the third financial year in a row the Current Account surplus has fallen.
In FY2013, the annual trade deficit rose to a record 10.9 trillion yen (£63bn), almost double the FY2012 figure (5.3 trillion Yen) largely due to continuing demand for imported energy which is now more expensive to import due to the weaker Yen. Exports increased 12% to 69 trillion Yen (£400bn) in FY2013 mainly due to stronger demand in the US and Europe. Many commentators had expected exports to increase even more due to the Yen’s depreciation. This has proved not to be the case as Japanese firms have off-shored much of their manufacturing capacity overseas in past years.
The trade deficit offset most of a strong income surplus which increased 14% to a record 16.7 trillion yen (£97bn). This is the 5th year in a row that the income account has increased buoyed by higher dividends and the weaker Yen.
The monthly Current Account in March 2014 recorded a surplus of 116.4 bn Yen (£677mil). Exports rose by 6.2% to 6.5 trillion Yen (£38bn) over the same period a year ago. Imports increased sharply by 23.2% to 7.6 trillion yen (£44bn) reflecting strong consumer demand ahead of April’s VAT rise.
0.3 Comment
Many commentators believe that Current Account surplus has bottomed out and will increase moderately during 2014 as exports continue to improve and some nuclear power stations are likely to come back on stream.
0.4 Disclaimer
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