Japan logs biggest current account surplus in FY 2007 1st half

Japan's current account surplus widened 34.1 percent in the April-September period from a year earlier to a record 12,424.1 billion yen, fueled by growing income account surplus and firm exports, the Finance Ministry said Monday.

The current account surplus was the highest level for a fiscal first half since comparable data became available in the April-September period of fiscal 1985, the ministry said in a preliminary report. The surplus expanded for the fourth consecutive half-year period.

The income account, covering income from Japanese investments in foreign securities and payments by foreign employers in Japan, marked an all-time-high surplus of 8,208.5 billion yen, up 22.5 percent from a year earlier and growing for the ninth straight half year.

The size of the income account surplus surpassed that of merchandise trade surplus for the fifth straight half-year period, underpinning that the Japanese economy has earned more on returns from overseas investments than from exports.

The surplus in goods and services trade gained 54.7 percent in the first half of fiscal 2007 from a year before to 4,792.0 billion yen, the ministry said.

The surplus in merchandise trade surged 40.9 percent to a record 6,321.3 billion yen, up for the second half-year period in a row.

Exports climbed 11.5 percent in the April-September period from a year earlier to a record 39,683.1 billion yen, up for the 11th half-year period in a row.

Imports grew 7.2 percent to a record 33,361.8 billion yen, up for the 10th straight half year.

'' Japan's exports remained firm in the first half of fiscal 2007 on the back of brisk auto exports, and the growth of overall exports outpaced that of imports,'' a ministry official said.

Auto exports increased 14.9 percent in the first half of fiscal 2007 and those of steel gained 18.7 percent.

The balance of services trade posted a deficit of 1,529.3 billion yen in the first half of the current fiscal year, up 10.0 percent from a year earlier.

''Strong demand for Japanese exports in Asia became a driving force in the growth of exports overall, more than offsetting negative fallout from the recent slowdown in the U.S. economy,'' said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

The yen's weakness against the U.S. dollar and other currencies also helped Japanese exports to increase, with Japanese products becoming more competitive in overseas markets, he added. This factor also boosted Japanese firms' overseas profits, economists said.

The dollar traded at 119.32 yen on average in the April-September period, compared with 115.29 yen a year earlier. The euro traded at 162.25 yen on average, compared with 145.97 yen a year before.

Looking ahead, Kumano forecast that Japan's current account surplus could decline as the merchandise surplus is expected to shrink with record-breaking crude oil prices raising the value of imports.

In September alone, Japan's current account surplus expanded 40.4 percent from a year earlier to 2,883.1 billion yen for the ninth consecutive monthly growth.

The balance of trade in goods and services logged a surplus of 1,582.6 billion yen, up 74.1 percent from a year before, the ministry said.

The surplus in merchandise trade gained 59.8 percent to 1,769.1 billion yen.

Exports rose 5.7 percent to 6,859.0 billion yen, up for the 46th straight month, while imports slipped 5.4 percent to 5,089.9 billion yen for the first decline in six months.

The income surplus grew 14.8 percent to 1,402.3 billion yen. ( Kyodo )

The current account balance -- the broadest gauge of trade -- is the difference between a nation's income from foreign sources and foreign obligations payable, excluding net capital investment.

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