TOKYO- Japan logged in September its largest current account surplus in 18 months as the trade balance swung into the black, the Ministry of Finance (MOF) said on Thursday, with hefty gains from overseas investments boosting the balance of payments.
Japan’s current account surplus stood at 2.72 trillion yen ($18.03 billion) in September, the MOF data showed, a little shy of economists’ median forecast for a surplus of 3.0 trillion yen in a Reuters poll.
It was the eighth straight month of surplus, the MOF data showed.
Japan’s current account has recently highlighted the pain that high energy costs and a weak yen have inflicted on the world’s third-biggest economy, which relies heavily on imports of fuel and raw materials.
Japan’s position as an export powerhouse has also waned in recent years, in part because companies have moved production overseas, in a gradual shift towards making overseas investment a pillar of the country’s earning power.
A breakdown of the current account data showed the primary income surplus from Japan’s direct investment and portfolio investment came to roughly 3 trillion yen in September, overwhelming a trade surplus of 341 billion yen.
For the first half of this fiscal year, Japan logged a record current account surplus of 12.7 trillion yen, with primary income gains at around 18.4 trillion yen, also a record and more than offsetting a trade deficit of 1.4 trillion yen.
Japan’s exports hit a record level in September, climbing for the first time in three months as automakers revved up shipments to the US and Europe, unshackled from a global chip shortage that had held them back a year earlier.
Export growth was 4.3 percent, outperforming economists’ expectations of a 3.1 percent increase and a 0.8 percent fall in August. The value of shipments clocked in at 9.2 trillion yen ($61 billion), a 2 percent increase over the previous record logged in October last year.
“Exports turned out solid overall despite concerns about the global economic slowdown,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
At the same time, imports slumped a somewhat larger-than-expected 16.3 percent as the base-line effects of higher energy bills resulting from Russia’s invasion of Ukraine have run their course.
With both the growth in exports and the drop in imports exceeding predictions, Japan booked its first trade surplus in three months of 62.4 billion yen, confounding expectations for a 425 billion yen deficit.
However, the worsening conflict in the Middle East and slower growth in China cloud the outlook for Japan, the world’s third-biggest economy.
“You cannot be optimistic given that elevated interest rates are cooling demand in the West and considering the impact of China’s real-estate woes on its economy,” Minami said.
By destination, US-bound exports surged 13 percent, led by hybrid gasoline-electric vehicles, engines as well as mining and construction machinery.
Exports to China, Japan’s largest trading partner, fell 6.2 percent for their 10th straight month of decline, dragged down by weaker demand for chips, electronic parts and food.
Overall, car shipments accounted for 18 percent of exports, offsetting declines in exports of chip-related products.
China-bound food exports, including fish, tumbled 58 percent due to its ban on Japanese food imports after Tokyo decided to release water from the Fukushima nuclear power plant into the ocean.