Econintersect: The current account balance for Japan dropped to a surplus of ¥116.4 billion ($1.1 billion) for March 2014. This was down from the February surplus of ¥612.7 billion ($5.95 billion) and also much less than the ¥305 billion ($3 billion) expected. The major factor in the low number was lower than expected exports. Also contributing was an increase in imports in March made to beat the 01 April increase in the sales tax, according to Reuters. The sales tax is actually a consumption tax (or more accurately a value added tax) and is added to purchases at every level for the difference above any value taxed previously down the chain. That means the entire value of imported goods are subject to the new 8% “sales” tax since the import cost is the first transaction for them inside Japan.
The March current account balance is the second in the black after the four previous months had been deficits. See graph from Trading Economics below. So far in calendar 2014 the current acount balance is in deficit by ¥860 billion ($8.4 billion). For fiscal 2013, which ended in March, the smallest current account balance surplus in history was recorded at ¥790 billion ($7.4 billion).
- Japan’s shrinking current account surplus highlights weak exports (Stanley White, Reuters, 12 May 2014)
- Japan Posts Record Low Current-Account Surplus in Fiscal ’13 (Masaaki Iwamoto, Bloomberg, 11 May 2014)
- Japan Current Account (Trading Economics, 12 May 2014)