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Japan trade surplus sinks on strong imports

TOKYO: Japan's trade surplus fell more than 30 percent in January from a year earlier, its tenth consecutive monthly fall, as rising crude oil prices pushed up the value of imports, the Finance Ministry said on Wednesday.

The ministry said that Japan's customs-cleared trade surplus for January fell 30.7 percent from a year earlier to 522.6 billion yen ($4.7 billion).

Economists said rising crude oil prices were behind the rapid fall in the surplus, which had already been under pressure from the strong yen, which tends to depress demand for Japanese goods overseas. Further declines in the surplus are likely in the coming months, they said, possibly undermining the yen against the dollar.

Financial markets showed little reaction on Wednesday morning as the data was mostly in line with an average forecast surplus of 543.5 billion yen by seven economists polled by Reuters this week. Their forecasts ranged from 470 billion yen to 687 billion yen.

"The data shows that imports grew much faster than exports. The biggest reason for the fall in the surplus in January is rising crude oil prices, which accounted for about 70 percent of Japan's import growth," said Kenji Arata, analyst at MCA Asia Pacific Co Ltd.

The ministry's data showed that imports grew 10.7 percent in January from a year earlier while exports grew only 1.7 percent.

A ministry official said the value of Japan's imports of crude oil soared 101.4 percent in January from a year earlier to 341.6 billion yen.

Japan is the world's second-largest oil importer, last year importing 250.735 million kilolitres of oil at a cost of 3.0 trillion yen.

DECLINING TREND IN SURPLUS EXPECTED TO CONTINUE.

A ministry official and analysts said Japan's trade surplus is expected to keep declining as long as high oil prices continue and imports from other Asian nations keep growing.

Japanese corporations have boosted imports of information-related electronic parts and machinery from their production sites in Asia, economists said.

Such import demand is being supported by brisk industrial output at home, one of the emerging bright spots in the Japanese economy.

Matthew Poggi, economist at Lehman Brothers said: "I do think the trade surplus will continue to contract at a record pace over the next few months and that is going to help the yen depreciate some more."

Japan's politically-sensitive trade surplus with the United States fell 1.9 percent in January from a year earlier to 477.8 billion yen for a second consecutive month. -Reuters