IHS Global Insight: Japan’s current account surplus narrows in January

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 Weak Global Economic Outlook and Stronger Yen Weigh on Further Improvement  

By Harumi Taguchi, Principal Economist, IHS Global Insight

 

Key Points:

·         Japan’s current account surplus narrowed 11.9% from the previous month to JPY1.5 trillion (USD13 billion) on a seasonally adjusted basis in January. Although this was an improvement of JPY419 billion from a year ago to JPY521 billion on a non-seasonally adjusted basis, the scale of the increases has softened.

·         The year-on-year growth largely reflected an increase in the goods balance surplus and a narrower services-balance deficit, while the goods and services balance recorded surplus for the third consecutive month on aseasonally adjusted basis. However, the uptrend in the trade balance is due largely to a steeper decline in imports, which outpaced the drop in exports. 

IHS Global Insight Views:

Primary income is likely to contribute to Japan’s sustained current account surplus and the Bank of Japan’s negative interest rate policy could encourage investment in positive-interest bearing foreign assets.

That said, the weak global economic outlook and the strengthening yen strengthening could weigh on income from both direct and portfolio investment over the near term.    

Weak prices of oil and other resources will support improvements in Japan’s trade balance, but a narrow trade deficit will likely remain over the near term because of the weak demand and the stronger yen. 

 

The post IHS Global Insight: Japan’s current account surplus narrows in January appeared first on The Insider Stories.

Source: The Insiderstories
IHS Global Insight: Japan’s current account surplus narrows in January

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