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To: DaveMG who wrote (13996)	8/23/1998 11:28:00 AM
From: DaveMG	Respond to of 152472

JAPAN: Weak yen fuels trade surplus growth By Khozem Merchant in Tokyo Japan's trade surplus in July rose for the 16th month in a row, by 56.8 per cent compared with the same period a year earlier. The surge was fuelled by the weak yen, which boosted exports to the US and Europe, and a fall in imports because of sluggish domestic demand. The politically sensitive surplus with the US climbed 60 per cent in July year on year, the 22nd consecutive monthly rise and the highest level in yen terms since September 1989. Exports to Asia fell 16 per cent year on year, the fifth straight monthly decline, and in volume terms by 18 per cent, the biggest slippage since 1991. The ministry of finance said the surplus would continue to rise in the short term but the pace of the acceleration would slow down as the impact of the government's economic measures, including tax cuts and public works projects, feed through into the economy. Economists in Tokyo said the figures for customs-cleared trade in July were in line with expectations and would probably add a bit more edge to talks in the US next month between Kiicho Miyazawa, the finance minister, and his US counterpart, Robert Rubin. The overall trade surplus swelled to Y1,316.1bn (œ5.6bn) in July year on year. Exports climbed 6.6 per cent to Y4,562.9bn while imports shrank for the seventh month in a row to Y3,246.8bn, a fall of 5.7 per cent from the same period in the previous year. Peter Morgan, senior economist at HSBC Securities Japan, said the picture was notable because of the robust level of exports to Europe and US while it was evident "Japan's economic development was having a negative impact on Asia". Steel and other non-ferrous metals were strong export performers, especially to US and European markets, rising by 33 per cent in volume terms, though the competitive benefit was partly eroded because of the weakness of overseas competitors, which had cut prices. Analysts said there was little evidence yet of the government's measures boosting domestic demand for imports. The impact of income tax rebates, which come into effect next month, are keenly awaited by analysts as a signal of whether consumers will spend or save the additional income, said Mr Morgan. ft.com