Japan’s current account surplus plunged 96.1 per cent in August from a year earlier to 58.9 billion yen ($404 million), a record low, the government said in a report on Tuesday.
According to the Finance Ministry, the record monthly low booked for August was a result of a widening trade deficit as a persistently weak yen further inflated import costs, reports Xinhua news agency.
The Ministry said in its preliminary report that the country’s goods trade deficit stood at 2.49 trillion yen with imports totaling 10.55 trillion, and exports reaching 8.06 trillion yen in the recording period.
Japan’s primary income, which reflects returns on investments made overseas, logged a surplus of 3.33 trillion yen, the largest since comparable data became available, the government’s data also showed.
This was due to the yen’s depreciation bolstering the value of returns on foreign investments by Japanese firms, the Ministry said.
Japan’s travel balance, meanwhile, dropped to a deficit of 7.2 billion yen, compared to a 15.5 billion yen surplus logged a year earlier, the Ministry said, leading to a service trade deficit of 615.9 billion yen in the recording period.
Japan’s current account surplus is one of the broadest measures of its trade with the rest of the world.
The data is keenly eyed by the Bank of Japan and the Finance Ministry ahead of new potential policy changes or monetary easing or tapering measures.
In Japan, the current account surplus increases the nation’s net foreign assets by the corresponding amount, and a current account deficit does the reverse.
Both the Japanese government and private payments are included in the calculation and it is called the current account because goods and services are generally consumed in the current period.