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Japan's Trade Surplus With U.S. Drops

February 16, 1988|From Reuters

TOKYO — Japan's trade surplus fell for the ninth straight month in January, but economists said the figures suggested that the improvement in the imbalances between Japan and its trading partners is slowing.

Japan's surplus with the United States declined to $2.97 billion in January from $3.28 billion a year ago, reflecting a surge in Japanese imports of U.S. goods, the government said.

Although Japan's overall surplus fell to $3.07 billion in January from $4.31 billion a year earlier, it was well above the $2.4 billion economists had anticipated.

"The pace of drops for the Japanese surplus is slowing down, even though the down trend has not changed," said Soichiro Akahane, an economist with the Bank of Tokyo.

On Friday, the U.S. Commerce Department reported that the nation's trade shortfall declined for the second straight month, to $12.2 billion in December.

Japan's figures for January suggest that the U.S. deficit continued to narrow last month. The Tokyo government reported exports to the United States grew by only 4.2% to $5.83 billion, while imports surged 23.4% to $2.86 billion.

J-Curve Distortion

January's total surplus, however, is only $1.2 billion below the year-ago level, following a December surplus that was a mere $120 million less. The past two months showed much less improvement than the November figure, which was a steep $2.7-billion drop from the year-ago level.

"This pace in the drop of the surplus was quite disappointing," said Richard Jerram, an economist with Kleinwort Benson International. But he said the rising volume of imports, fueled by strong Japanese consumer demand, was an encouraging sign.

Total imports climbed 33.9% from a year earlier in January to $14.20 billion, while exports grew only 15.8% to $17.27 billion.

The import growth may have been even more pronounced if not distorted by the so-called J-curve, due to the weak dollar that inflates the value of Japanese exports and tends to make the surplus look larger than it really is, economists said.

The J-curve has skewed the figures and may continue to do so for the first part of this year, said David Pike, economist for U B S Phillips and Drew International Ltd.

"Imports had increased quite strongly through last year," he said. "There has especially been a rise in non-oil imports."

Japan also reported a $1.82-billion surplus in trade with the European Community in January, compared to $1.56 billion a year earlier, and a $310-million surplus with Southeast Asia, up slightly from $201 million.

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