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Economy in Brief

Japan Current Account Hits Record 2.02 Trillion in October; Trade, Services & Income All Contribute
by Carol Stone December 13, 2006

Japan's current account surplus rose ¥611.4 billion in October, according to data reported December 13 by the Ministry of Finance, reaching a record ¥2,020.1 billion (seasonally adjusted).The previous record was ¥2,015.1 billion in December 2005.

The month-to-month increase in the surplus included favorable moves in every segment of the current account.The goods balance increased to ¥852.7 billion from ¥437.2 billion, more than reversing September's shrinkage.Exports rose ¥113.0 billion or 1.9% and imports fell ¥302.5 billion or 5.4%.The merchandise trade data reported earlier indicate that just under half of the fall in imports was in "mineral fuels", including petroleum and natural gas products.Among exports, the strongest items appear to be motor vehicles and metals, as suggested by year/year gains in not-seasonally-adjusted data.

There is a deficit in services, but it shrank markedly in October, to ¥122.8 billion from ¥208.5 billion in September.It is erratic on a monthly basis, but the October reading compares favorably with an average for all of last year of ¥219.4 billion and with ¥308.3 billion in 2004.

The balance on income flows grew as well in October, as gains in assets held abroad are bringing in increased portfolio income. The monthly change in October portfolio income was small, just to ¥1,071.0 billion from ¥1,038.4 billion in September, but these are both up from ¥852.4 billion in October a year ago and ¥737.6 billion for all of 2005.Total income includes interest on bank loans, profits from direct investments, and wage income; the October total was ¥1,374.9 billion.

All together in Japan's current account performance for October, the balance of trade in goods showed the largest improvement, but the largest net surplus is in income.As world capital markets become more and more integrated and direct investment becomes more diversified around the world, swings in both goods and income balances are likely to be wider and more frequent.

Monthly Averages
JAPAN: SA, Bil.¥ Oct 2006 Sept 2006 Aug 2006 Year-Ago
2005 2004 2003
Current Account Balance 2020.1 1408.7 1605.0 1739.6 1537.7 1557.4 1316.9
Goods Exports 6134.1 6021.1 6170.0 5510.8 5212.5 4841.6 4303.3
Goods Imports -122.8 -208.5 -169.8 -54.1 -219.4 -308.3 -300.8
Balance on Services 1374.9 1266.0 105.73 1099.3 966.2 776.9 692.4
Balance on Income 1374.9 1266.0 1057.3 1099.3 966.2 776.9 692.4
  Portfolio Income 1071.0 1038.4 838.2 852.4 737.6 622.8 569.9
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