The surplus in the current account shrank for the first time in five years in fiscal 2018 to ¥19.41 trillion as China’s economic slowdown curbed growth in exports and higher oil prices boosted imports, government data showed Tuesday.
The surplus in the current account, one of the widest gauges of international trade, logged a year-on-year decrease of 12.4 percent in the fiscal year ended in March, according to a preliminary report by the Finance Ministry.
The goods trade surplus tumbled 84.4 percent to ¥706.8 billion on slower growth in exports, becoming the largest driver contributing to the drop in its current account.
The escalating trade spat between the United States and China is expected to keep pressure on Japan’s exports, with the latest data showing the surplus in the current account fell more than 10 percent in March from a year earlier.
The current account will be able to stay in surplus for the time being, supported mainly by primary income as goods trade will continue struggling amid the U.S.-China trade war, said Masato Koike, an economist at the Dai-ichi Life Research Institute.
Primary income reflects how much Japan earns from foreign investments.
Exports grew 2.6 percent to ¥80.32 trillion last fiscal year, but the increase was down from 10.6 percent the previous year on falling exports to China.
Imports expanded 8.0 percent to ¥79.61 trillion, driven by a rise in prices of commodities including crude oil and liquefied natural gas.
Among other key components, the primary income account registered a surplus of ¥21.07 trillion, up 3.9 percent from the previous year.
The travel surplus jumped 23.3 percent from a year earlier to ¥2.49 trillion as the number of foreign travelers to Japan hit a record 31.63 million in fiscal 2018.
But overall services trade marked a deficit of ¥637.8 billion due to a fall in income from marine transport services.
In March alone, Japan posted a current account surplus of ¥2.85 trillion, marking the 57th consecutive month of black ink but down 10.6 percent from a year earlier.
Primary income registered a surplus of ¥2.06 trillion, goods trade logged a surplus of ¥700.1 billion and services trade ran a surplus of ¥345.1 billion.