Japan current account surplus improves in May, outlook dim

Tue Jul 8, 2014 12:47am EDT
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By Stanley White

TOKYO (Reuters) - Japan's current account logged a higher-than-expected surplus in May, government data showed on Tuesday, as the trade deficit narrowed due to a decline in imports.

But the improvement in the current account surplus could be temporary as export growth slowed in May, a sign that firms shifting manufacturing capacity overseas has made it difficult for exports to grow rapidly.

The current account data also highlighted the need to stimulate domestic demand and the services sector as exports are no longer enough to drive economic growth.

The surplus was 522.8 billion yen ($5.14 billion), more than the median forecast for a 403.6 billion yen surplus. It was the fourth consecutive month of surpluses, the finance ministry said.

In April, the surplus was 187.4 billion yen.

Exports rose 2.0 percent in May from a year ago, slower than a 6.2 percent annual gain in April.

Imports fell an annual 0.4 percent, following a 6.6 percent annual increase in April. As a result, the trade deficit in May narrowed to 675.9 billion yen.

The income surplus was 1.5 trillion yen in May, down 3.2 percent from the same period a year earlier, due to a decline in earnings from overseas subsidiaries of Japanese firms.   Continued...

Trucks line up after they loaded containers at a port in Tokyo March 19, 2014. REUTERS/Yuya Shino