Japan's trade surplus expands 72.8% to $5.1b

Japan's trade surplus expands 72.8% to $5.1b

TOKYO (AFP): Japan's trade surplus with the rest of Asia expanded 72.8 percent from a year earlier to 578.0 billion yen (US$5.1 billion) in May, the finance ministry said yesterday.

The surplus with Asia exceeded that with the United States and the European Union combined.

Exports to Asia rose 18.9 percent to 1,796.7 billion yen, with imports edging up 3.6 percent to 1,218.6 billion yen, the ministry said.

Japan's contentious trade surplus showed a dramatic rise for the second month in a row in May, giving Prime Minister Ryutaro Hashimoto some unwelcome news to take to this weekend's summit of G-7 nations.

Japan's customs-cleared trade surplus, often the source of bitter rows with the United States, jumped more than 200 percent in May from a year earlier to 738.27 billion yen (US$6.53 billion), the Finance Ministry said on Wednesday.

The surplus with the United States, which has already been grumbling about the growing trade imbalance between the two countries, surged 93 percent in May from a year earlier to 322.87 billion yen ($2.85 billion).

"We need to continue to keep careful watch to see whether there has been a change in the declining trend of the trade surplus," a senior Finance Ministry official told reporters.

Until recently, the ministry had steadfastly maintained that the trade surplus was still basically on a downward path, although it rose in some months earlier this year on a year-on- year basis.

May's surge reflected a slowdown in imports after a rise in Japan's sales tax in April, and the effects of a weaker yen.

The dollar edged down against the yen on the trade figures as currency markets speculated that Japanese and U.S. governments would favor a higher yen to rectify the trade imbalance. The dollar briefly fell below 113 yen after hovering above 113 yen in early Tokyo trading.

A strong yen makes Japanese goods more expensive in global markets, thus hurting their competitive edge and curbing exports from Japan.

With the European Union (EU), the surplus surged 235.0 percent to 206.6 billion yen. Exports to EU countries swelled 21.1 percent to 640.5 billion yen while imports dropped 7.0 percent to 433.9 billion yen.

The surplus with the United States widened for the eighth consecutive month, while the surplus with the EU and Asia increased for the second consecutive month.

Japan's deficit with China grew 2.0 percent to 176.4 billion yen, while its deficit with energy supplier Indonesia fell 49.2 percent to 32.8 billion yen.

The surplus with South Korea declined 0.3 percent to 121.1 billion yen, but rose against other Asian economies.

Japan's surplus with Taiwan leapt 88.6 percent to 133.3 billion yen, with imports down a sharp 14.0 percent to 132.4 billion yen against exports to 265. 7 billion yen, a rise of 18.3 percent.

With Malaysia, the surplus increased 70.2 percent at 36.4 billion yen, and rose 6.1 percent with Thailand to 71.5 billion yen. The surplus with the Philippines increased 28.2 percent to 33.5 billion yen.