Japan’s trade surplus hits 18-month high

Tokyo, October 25:

Japan’s trade surplus hit an 18-month high in September thanks to strong exports of fuel-efficient cars, steel and electronic products, the government said on Wednesday.

The trade surplus swelled to a bigger-than-expected 1.01 trillion yen (8.50 billion dollars), up 6.9 per cent from a year earlier and above one trillion yen for the first time since March 2005, the finance ministry said. Exports gained 15.3 per cent from a year earlier to 6.83 trillion yen while imports climbed 16.9 per cent to 5.82 trillion yen, largely because of high oil prices, the ministry said in a statement. It was the second consecutive year-on-year rise and larger than the surplus of about 832 billion yen expected by the market.

“Japanese cars are popular in the United States because of their fuel efficiency,” said Norio Miyagawa, an economist at Shinko Research Institute. Strong demand for Japanese cars was likely to continue because of the high cost of gasoline (petrol), Miyagawa said.

The weaker yen was also helping boost demand for Japanese cars as it allows the country’s automakers to offer more competitive prices overseas, he said. Exports to the US climbed 20.4 per cent to a record 1.57 trillion yen in September as exports of cars jumped 49.3 per cent and chips and electronics devices rose 32.1 per cent. Car exports to the United States by volume rose 42.5 per cent year-on-year to 243,267 units in September, up from 194,112 in August and 218,748 in July.

Tatsushi Shikano, an analyst at Mitsubishi UFJ Research and Consulting, said high oil prices were still taking their toll on the overall trade balance.

“There is still a significant impact from the high oil prices,” he said.

The average price of crude oil was 72.1 dollars per barrel in September, up 21.4 per cent from a year earlier. Exports to the European Union area increased 14.1 per cent to 957.16 billion yen in September supported by a 10.7 per cent increase in the value of automobile shipments.

Exports to the rest of Asia rose 12.4 per cent to 3.24 trillion yen on increased shipments of non-ferrous metals. Shipments to China climbed 19.8 per cent to 963.80 billion yen as exports of semiconductor chips and other electronics devices increased 26.6 per cent.

For the six months to September as a whole, the first half of the Japanese financial year, the surplus was down 2.5 per cent to 3.90 trillion yen as exports rose 15.2 per cent to 37.40 trillion yen.