IHS Global Insight: Solid increase for Japan’s current-account surplus in March, but weaker global economy weighs on improvement
By Harumi Taguchi, Principal Economist, IHS Global Insight
- Japan’s current-account surplus widened by 6.9% year-on-year (y/y) to JPY2.98 trillion (USD27.5 billion) on a non-seasonally adjusted basis.
- The y/y improvement largely reflected wider surplus for the goods balance, reaching the largest since March 2010, with declines for imports outpacing exports.
- The scale of the surplus for the services, which reached the highest level since 1996 on a non-seasonally adjusted basis, also contributed to the y/y increase, although the services balance turned to deficit on a seasonally adjusted basis.
- Primary income was the main source of the current-account surplus, but a decline for portfolio investments suppressed primary income somewhat.
- IHS expects Japan’s current account to remain in surplus over the near term because weak prices of oil and other resources and upside from yen strengthening are likely to continue. That said, further improvement is not likely unless external demand improves. Factory shutdowns following the Kumamoto earthquake will act as a temporary downside factor while yen strengthening could weigh on exports over the near term. Yen strengthening could also affect the number of tourists from abroad and thus spending. Primary income could be subdued because of softer income from foreign currency assets in line with yen strengthening and weak profit earnings from overseas operations.