TOKYO: Japan’s current account surplus last year shrank to its lowest in almost three decades, data showed yesterday, as exports to China and Europe slumped in a worrying sign for the world’s third-largest economy.
The Finance Ministry said the current account, the broadest measure of Japan’s trade with the rest of the world, came in at 4.7 trillion yen ($ 50 billion) in 2012, the smallest annual surplus since comparable data was made available in 1985.
The current account measures not only international trade in goods but also services, tourism and Japan’s foreign investments abroad.
The news was also poor for December, with the country logging a monthly deficit of 264.1 billion yen, reversing a year-earlier surplus of 265.7 billion yen.
That was the first deficit for the month of December since 1985 and the second straight month in negative territory.
The figures come after Japan last month said it logged a record trade deficit for 2012, the second consecutive annual trade shortfall.
The data are likely to heap renewed pressure on Japan’s new government to fulfill an election pledge to reinvigorate the limp economy.
The European Union’s financial troubles hit demand for Japan-brand imports, while shipments to major trade partner China slumped due to a Tokyo-Beijing territorial spat, which sparked a consumer boycott of Japanese goods.
Tokyo’s energy bills, meanwhile, have shot up as it turned to pricey fossil-fuel alternatives after switching off its nuclear reactors following the atomic crisis at Fukushima in 2011, with expenses set to grow as the yen weakens.
“While the yen’s recent weakening will help exports to recover somewhat, the same yen weakness will push up costs for imported goods and materials,” Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute, told Dow Jones Newswires.
“That means any current account surplus will never return to the level where it once was.”
Meanwhile, Japan’s Finance Minister Taro Aso said yesterday the yen’s recent tumble against the dollar was something unexpected, a comment which immediately led to a rally in the Japanese unit.
Aso told the lower house budget committee: “The exchange rate has abruptly reached the 90 yen level from its previous 78-79 yen level in a manner we didn’t anticipate,” according to Japanese media.
Following the comment in the afternoon, the dollar slid to 92.17 yen from a morning high of 93.75 yen. But a Japanese Finance Ministry official later clarified Aso’s remark by saying he had meant to say the yen’s recent fall had been “fast-paced” rather than unexpected, according to Dow Jones Newswire.
The official declined to make any further comment, apparently out of concern that further clarification would be taken as an attempt to talk down the yen, the report said.
Aso was commenting on the economic drive by Japan’s new conservative government of Prime Minister Shinzo Abe, which swept to power in December, to ease monetary policy, increase public spending and strive for economic growth.
“The Abe government is the first in 20 years to move these three (elements),” helping an upsurge in share prices, the finance minister said, according to Japanese media.
The yen has tumbled about 10 percent against the dollar since Abe took office in late December, sparking criticism that Japan was attempting competitive devaluation of its currency.