Japan’s H1 current account surplus falls the most yr-on-yr since 2008

By Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s current account suffered the biggest year-on-year decline in the second half of this fiscal year since the 2008 global financial crisis, amid a weak yen and a persistent trade deficit.

The annual decline brought the current account surplus to a level unseen since 2014, the Ministry of Finace data showed on Wednesday.

For the first half of this fiscal year, the current account surplus fell by 6.8627 trillion yen ($47.1 billion) from a year earlier to 4.8458 trillion yen, the biggest decline since the latter half of fiscal 2008, the data showed.

Japan’s current account surplus stood at 909.3 billion yen in September, compared with economists’ median forecast for a surplus of 234.5 billion yen in a Reuters poll.

The current account surplus has long been regarded as a sign of export might and a source of confidence in the safe-harbour yen, yet recent years have seen the account occasionally swing to deficit on a monthly basis.

While the cost of imports rise as the yen weakens, the attendant boost to exports that become cheaper to foreign buyers has not been as great due to firms shifting production abroad – a consequence of a previously strong yen making exports pricey.

Japan offsets trade deficits with returns from a growing number of overseas investments – its primary income balance clocked a record 3.327 trillion yen in August, helped by a weak yen. But a worsening balance of payments highlights structural economic change and runs against Japan’s trade powerhouse image.

($1 = 145.6800 yen)

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