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.
Japan current account surplus shrinks
Japan current account surplus shrinks
Saudi investment pipeline active as reforms advance, says Pakistan minister
ALULA: Pakistan’s Finance Minister Mohammed Aurangzeb described Saudi Arabia as a “longstanding partner” and emphasized the importance of sustainable, mutually beneficial cooperation, particularly in key economic sectors.
Speaking to Arab News on the sidelines of the AlUla Conference for Emerging Market Economies, Aurangzeb said the relationship between Pakistan and Saudi Arabia remains resilient despite global geopolitical tensions.
“The Kingdom has been a longstanding partner of Pakistan for the longest time, and we are very grateful for how we have been supported through thick and thin, through rough patches and, even now that we have achieved macroeconomic stability, I think we are now well positioned for growth.”
Aurangzeb said the partnership has facilitated investment across several sectors, including minerals and mining, information technology, agriculture, and tourism. He cited an active pipeline of Saudi investments, including Wafi’s entry into Pakistan’s downstream oil and gas sector.
“The Kingdom has been very public about their appetite for the country, and the sectors are minerals and mining, IT, agriculture, tourism; and there are already investments which have come in. For example, Wafi came in (in terms of downstream oil and gas stations). There’s a very active pipeline.”
He said private sector activity is driving growth in these areas, while government-to-government cooperation is focused mainly on infrastructure development.
Acknowledging longstanding investor concerns related to bureaucracy and delays, Aurangzeb said Pakistan has made progress over the past two years through structural reforms and fiscal discipline, alongside efforts to improve the business environment.
“The last two years we have worked very hard in terms of structural reforms, in terms of what I call getting the basic hygiene right, in terms of the fiscal situation, the current economic situation (…) in terms of all those areas of getting the basic hygiene in a good place.”
Aurangzeb highlighted mining and refining as key areas of engagement, including discussions around the Reko Diq project, while stressing that talks with Saudi investors extend beyond individual ventures.
“From my perspective, it’s not just about one mine, the discussions will continue with the Saudi investors on a number of these areas.”
He also pointed to growing cooperation in the IT sector, particularly in artificial intelligence, noting that several Pakistani tech firms are already in discussions with Saudi counterparts or have established offices in the Kingdom.
Referring to recent talks with Saudi Minister of Economy and Planning Faisal Alibrahim, Aurangzeb said Pakistan’s large freelance workforce presents opportunities for deeper collaboration, provided skills development keeps pace with demand.
“I was just with (Saudi) minister of economy and planning, and he was specifically referring to the Pakistani tech talent, and he is absolutely right. We have the third-largest freelancer population in the world, and what we need to do is to ensure that we upscale, rescale, upgrade them.”
Aurangzeb also cited opportunities to benefit from Saudi Arabia’s experience in the energy sector and noted continued cooperation in defense production.
Looking ahead, he said Pakistan aims to recalibrate its relationship with Saudi Arabia toward trade and investment rather than reliance on aid.
“Our prime minister has been very clear that we want to move this entire discussion as we go forward from aid and support to trade and investment.”
