Record trade surplus in
Japan
The Japanese government wants a weak yen
Japan's trade surplus hit a new record in January, as the
collapse of the Japanese economy continues to cause
imports to plummet.
The surplus is rising despite a fall in Japanese exports to
its main markets in the USA and Asia.
The January trade surplus
rose by 72% compared to
one year ago to ¥807bn
($6.8bn), while the
merchandise trade surplus
was even higher at ¥927bn
($7.8bn).
Economists warned that the
figures, while indicative of the
serious condition in the
Japanese domestic
economy, demonstrate that
Japan cannot rely on exports
to pull itself out of recession.
"We cannot expect external demand to support the
economy," said Koichi Ono of the Daiwa Institute of
Research.
The Japanese economy is in its worst recession for fifty
years. In 1998 GDP (gross domestic product) fell by
2.8%.
Growing trade tensions
The growing Japanese trade surplus, and the record US
trade deficit, are adding to protectionist pressures in
both countries.
The US has threatened to introduce punitive sanctions
against Japanese exports of steel which it says are
being sold at below market prices.
It also may try and force Japan to open its markets to
foreign goods, using the broad powers in Section 301 of
the US trade legislation, which has just been reactivated.
Japan, in turn, has said it will not negotiate on steel
imports, and has joined the EU in challenging Section
301 at the World Trade Organisation.
Yen reverses course
The strong trade figures gave the currency markets a jolt
as they wondered whether the Japanese government's
policy of a weak yen was sustainable in the long run.
The yen strengthened to ¥118 to the dollar, its best level
in several weeks, after the news was announced.
But Japanese officials continued to talk down the
currency.
Eisuke Sakakibara, Japan's "Mr Yen" and vice-finance
minister for international affairs, again warned that
"excessive yen strength was undesirable."
And the Governor of the Bank of Japan, Masura Hayami,
also said that he was prepared to loosen monetary
policy even further to boost domestic growth.
Japan already has the world's lowest interest rates, with
a base rate of only 0.15%.
By mid-day the yen had fallen back to 118.53, still
stronger than its Friday close.
news.bbc.co.uk
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