Tuesday, 15 February 2005

Japan's current account surplus rises in December

Japan's current account surplus in December jumped 35.1 percent to 1.62 trillion yen, well above the economists' consensus forecast of some 1.27 trillion yen.

The merchandise trade surplus was up a marginal 0.5 percent to 1.30 trillion yen as exports rose 8.5 percent to 5.13 trillion yen and imports increased 11.6 percent to 3.82 trillion yen. However, the overall surplus was further boosted by a narrowing of the services account deficit to 305.5 billion yen from 423.1 billion yen a year earlier, while the surplus on the income account increased to 665.6 billion yen from 434.8 billion yen.

For the whole of 2004, the current account surplus hit a record 18.59 trillion yen, up 17.9 percent. The services and income account surplus rose 21.6 percent to 10.16 trillion yen. Exports were up 12.3 percent to 58.31 trillion yen while imports grew 10.9 percent to 44.00 trillion yen.

No doubt, much of the current account surplus will have to be recycled into US dollar assets to fund the US current account deficit. Nouriel Roubini and Brad Setser have a paper discussing the US current account deficit.

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