Japan's surplus falls, but worries persist

Japan's surplus falls, but worries persist

TOKYO (Reuters): Japan's trade surplus declined in November for the first time in 20 months, but economists say it will stay large and concerns about trade friction with the United States will persist until Japan's economy fully recovers.

The Ministry of Finance said on Monday that Japan's customs- cleared trade surplus for November fell 15.1 percent from a year earlier to 902.1 billion yen (US$7.84 billion), while the politically sensitive trade surplus with the United States rose 0.9 percent from a year earlier to 488.2 billion yen.

Economists said the effects of the yen's sharp rise since early October and a slowdown of the global economy made a dent in Japan's exports, with exports to the United States declining for the first time in 32 months, by 7.1 percent.

Various factors caused the decline, including "Japanese economic conditions, currency market movements, movements in crude oil prices and in other international markets", a Finance Ministry official told reporters.

The yen was valued at 118.36 to the dollar for November, which was 3.4 percent stronger than the year-earlier 122.42, the official said.

The Tokyo currency market responded little to the data as traders fretted over the impact of the impeachment of U.S. President Bill Clinton by the House of Representatives on Saturday.

Makoto Ishikawa, an economist at Japan's Research Institute Ltd. said: "Japan's export decline could be inevitable as the economy in the United States could slow further, but vigilance over trade friction is needed."

He said a firm trend of a falling Japanese surplus could not be established as long as Japan's domestic demand and imports remained feeble.

U.S. Ambassador to Japan Thomas Foley said last week that with the bilateral trade gap widening, the chances had been raised of trade frictions resurfacing next year.

"I don't know if this (trade data) will alleviate it because I think the U.S is looking at 1999 as the year to bring out that weapon again of trade friction. I think they've waited until their economy was weak and now they are falling back on that ploy again," Michael Lockrow, an economist at Technical Data in Tokyo told Reuters Television.

Japan's imports in November fell 11.9 percent from a year earlier to 2.787 trillion yen, posting an 11th straight month of declines.

Exports slumped 12.7 percent in November from a year earlier, with pronounced drops in semiconductors and office equipment, outpacing an 11.9 percent decline in imports, MOF said.