The Wall Street Journal reports,"the current account, the broadest measure of Japan's trade with the rest of the world, came to a surplus of ¥587.3 billion in September, up 14% from the year-before month, data released by the Ministry of Finance showed Monday. That was better than what the market had expected: a surplus of ¥430 billion".
The result was helped in part by smaller increases in import volumes in September than in the preceding months, and by a sharp increase in dividend payments by overseas subsidiaries of Japanese companies. But once these and other seasonal peculiarities are taken into account, the balance actually came to a deficit of ¥125.2 billion, the largest ever deficit since the current data series began in 1996.
Japan's current account surplus has been on a declining trend in recent years. Relative to the nation's gross domestic product, it has dropped from around 5% in 2007 to only 1% in 2012, according to the International Monetary Fund. The main contributing factor is rising commodity prices as more emerging economies industrialized. The situation has also been exacerbated by Japan's increased consumption of fossil fuels in the last couple of years, due to the shutdown of nuclear power plants following the March 2011 nuclear disaster.
The result was helped in part by smaller increases in import volumes in September than in the preceding months, and by a sharp increase in dividend payments by overseas subsidiaries of Japanese companies. But once these and other seasonal peculiarities are taken into account, the balance actually came to a deficit of ¥125.2 billion, the largest ever deficit since the current data series began in 1996.
Japan's current account surplus has been on a declining trend in recent years. Relative to the nation's gross domestic product, it has dropped from around 5% in 2007 to only 1% in 2012, according to the International Monetary Fund. The main contributing factor is rising commodity prices as more emerging economies industrialized. The situation has also been exacerbated by Japan's increased consumption of fossil fuels in the last couple of years, due to the shutdown of nuclear power plants following the March 2011 nuclear disaster.
The sharp weakening of the yen, sparked by Prime Minister Shinzo Abe's policy of aggressive monetary easing, has prompted some Japanese companies to repatriate reserved profits at foreign subsidiaries back to Japan, in what is seen as a window-dressing move. Such transactions have boosted the nation's income balance—thus the current account—in recent months, including March and September. But these are only one-off developments that won't permanently improve the balance.
"The more important issue is that the weak yen hasn't boosted Japan's export volumes," Mr. Shiono said economist with Credit Suisse in Tokyo, explaining why Japan's current account balance remains on a deteriorating trend.
