UPDATE 1-Japan current account surplus falls to record low in 2012

Thu Feb 7, 2013 7:30pm EST

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* Dec current account gap 264.1 bln yen vs forecast 144.2
bln
    * 2012 current account surplus 4.7 trln yen, record low
    * Energy imports, weaker yen weighing on balance of payments
    * Pick-up in exports may still be a few months away

    By Stanley White
    TOKYO, Feb 8 (Reuters) - Japan posted its smallest annual
current account surplus on record in 2012 after weak global
demand and a rise in energy imports pushed its monthly balance
into deficit for a second  straight month in December.
    The monthly deficit was 264.1 billion yen ($2.83 billion),
Ministry of Finance data showed on Friday, much larger than a
median estimate of 144.2 billion yen in a Reuters poll.
    That cut the full-year current account surplus to 4.7
trillion yen, down by more than half from 2011 and the smallest
since 1985 when Japan started compiling comparable data.
    Prime Minister Shinzo Abe, who won office in December, has
explicitly stated he wants to "correct" the trend for excessive
yen gains to help the economy.
    The current account is expected to improve gradually as a
weak yen boosts exports, but some economists say the benefits
may not appear until the second quarter of this year. 
    Until then, the Bank of Japan could lean toward easing
monetary policy further as Abe pushes for more aggressive steps
from it to end nearly two decades of low-grade deflation.
    "I am not expecting Japan's current account deficit will
become a trend, but the surplus will probably stay at a lower
level," said Yoshimasa Maruyama, chief economist at Itochu
Economic Research Institute in Tokyo.
    "Japan's energy imports are expected to stay high this year
and next year. The recent yen decline will likely help boost
exports but at the same time it will adversely impact import
costs."

   

    In January 2012, Japan recorded a monthly current account
deficit of 455.6 billion yen, a record low.
    The yen is near its lowest level against the dollar
in almost three years on speculation the Bank of Japan could
speed up policy easing by purchasing more government debt.
    In the coming weeks Abe will nominate three candidates for
BOJ governor and its two deputy governors, giving him an
opportunity to shift the central bank in line with his economic
policy of aggressive monetary easing and fiscal spending.
    Analysts expect Japan will grow around 2 percent in the next
fiscal year from April, aided by the new government's stimulus
spending and the yen's retreat on expectations of further
monetary stimulus.
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