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Japan current account surplus falls to record low in 2012

December current account gap ¥264.1 billion vs forecast ¥144.2 billion
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First Published: Fri, Feb 08 2013. 11 32 AM IST
The current account is expected to improve gradually as a weak yen boosts exports, but some economists say the benefits may not appear until the second quarter of this year. Photo: AFP
The current account is expected to improve gradually as a weak yen boosts exports, but some economists say the benefits may not appear until the second quarter of this year. Photo: AFP
Tokyo: Japan posted its smallest annual current account surplus on record in 2012 after weak global demand and a rise in energy imports pushed its monthly balance into deficit for a second straight month in December.
The monthly deficit was ¥264.1 billion ($2.83 billion), ministry of finance data showed on Friday, much larger than a median estimate of ¥144.2 billion in a Reuters poll.
That cut the full-year current account surplus to ¥4.7 trillion, down by more than half from 2011 and the smallest since 1985 when Japan started compiling comparable data.
Prime Minister Shinzo Abe, who won office in December, has explicitly stated he wants to “correct” the trend for excessive yen gains to help the economy.
The current account is expected to improve gradually as a weak yen boosts exports, but some economists say the benefits may not appear until the second quarter of this year.
Until then, the Bank of Japan (BoJ) could lean toward easing monetary policy further as Abe pushes for more aggressive steps from it to end nearly two decades of low-grade deflation.
“I am not expecting Japan’s current account deficit will become a trend, but the surplus will probably stay at a lower level,” said Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute in Tokyo.
“Japan’s energy imports are expected to stay high this year and next year. The recent yen decline will likely help boost exports but at the same time it will adversely impact import costs.”
In January 2012, Japan recorded a monthly current account deficit of ¥455.6 billion, a record low.
The yen is near its lowest level against the dollar in almost three years on speculation the Bank of Japan could speed up policy easing by purchasing more government debt.
In the coming weeks Abe will nominate three candidates for BoJ governor and its two deputy governors, giving him an opportunity to shift the central bank in line with his economic policy of aggressive monetary easing and fiscal spending.
Analysts expect Japan will grow around 2% in the next fiscal year from April, aided by the new government’s stimulus spending and the yen’s retreat on expectations of further monetary stimulus.
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First Published: Fri, Feb 08 2013. 11 32 AM IST
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