Japan records smallest current account surplus for August as imports weigh

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TOKYO, Oct 11 (Reuters) – Japan’s current account surplus fell to its lowest level on record for August, according to finance ministry data, as soaring energy import prices exceeded rising export prices, depleting national wealth.

The surplus came to 58.9 billion yen ($404.45 million), lower than economists’ median forecast of 121.8 billion yen in a Reuters poll. On a seasonally adjusted basis, the current account recorded a deficit of 530.5 billion yen for a second consecutive month of deficit.

Japan has not recorded a current account deficit on an annual basis due to years of trade surplus. However, the current account surplus has shrunk for four consecutive years through March as the country’s trade balance deteriorates.

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Once seen as a sign of Japan’s export power and a source of confidence in its safe-haven yen, the country’s current account surplus has occasionally turned into a deficit on a monthly basis in recent years.

While the weakness of the yen has inflated the cost of imports, its rise in the value of exports has not been as significant due to a continued shift of production overseas.

As Japan continues to offset trade deficits with returns from overseas investment, its deteriorating balance of payments highlights structural changes in the economy, running counter to its image as a trading powerhouse.

Japan’s primary income balance hit a record high of 3.327 trillion yen as returns from overseas investment rose steadily in recent years.

This reflects companies that have moved production overseas for years as a strong yen has made their exports less competitive.

Politicians are more concerned that the weak yen will push up import bills and the cost of living.

The rising import bill, due in part to the weaker yen, would hurt households and businesses by depleting national wealth due to heavy reliance on fuel and food imports.

($1 = 145.6300 yen)

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Reporting by Tetsushi Kajimoto; Editing by Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

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