One of Japan's Destination - Photo by Government of Japan

JAKARTA (TheInsiderStories) – Japan’s current account surplus rose 4.2 percent year on year (y/y) to JPY3.1 trillion (US$285 billion) on a non-seasonally adjusted basis in March. The surplus jumped 84.0 percent from the previous month to JPY1.8 trillion on a seasonally adjusted basis, thanks largely to the end of disruption caused by Japan’s trade partners’ Lunar New Year holidays.

The year-on-year increase largely reflected a 37.6 percent (or JPY325 billion) rise in the trade surplus on a non-seasonally adjusted basis. Exports rose 3.7 percent y/y, thanks to strengthened export growth to Asia, while imports declined 0.9 percent y/y — the first contraction since December 2016.

The service balance surplus narrowed by 15.3 percent y/y to JPY193 billion due to a narrower surplus from other services such as construction, finance and insurance, and information services. Although primary income remained the major source of the current account surplus, weaker income from direct investment softened the surplus by 6.0 percent y/y to JPY2.1 trillion.

Taguchi assessed the improving global economic outlook is likely to help Japan’s exports, softer upward momentum in global demand and higher oil prices will probably weigh on Japan’s trade balance over the near term. The expansion of the U.S protectionism and trade friction with China are great concerns for Japan’s trade and could narrow Japan’s current surplus.

That said, Japan’s current surplus is likely to continue over the near term, given that recent correction to the yen’s appreciation is likely to contribute to tourism and income from foreign currency assets. An uptrend in large-scale mergers and acquisitions of overseas companies by Japanese companies will also support primary income over the medium term.

Email: linda.silaen@theinsiderstories.com

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