Rising Oil Prices Hit Japan's Trade Surplus

TOKYO (AFP) - Japan's trade surplus in August fell sharply for the first decline in 14 months as higher costs for imported oil combined with weaker export growth, prompting concerns about the country's economic outlook, the finance ministry said.
The surplus fell 26 percent from a year earlier to 576.1 billion yen (5.2 billion dollars), coming in far below consensus forecasts of economists polled by the Nihon Keizai economic daily for a surplus of 833.4 billion yen.
Imports jumped 18.4 percent to 4.21 trillion yen, the second highest total ever, as crude oil hit 37.6 dollars a barrel, up from 28.4 dollars a year earlier, the ministry said. Exports rose 10.4 percent to 4.78 trillion yen.
"Exports were strong but the rising crude oil values were very large," said ministry official Hiroshi Hada Wednesday.
The trend of declining growth in exports, following 14.3 percent in July, when the trade surplus totalled 1.14 trillion yen, and 19.4 percent in June, has some economists worried about Japan's overall recovery.
"The August data implies that exports will most likely gradually lose their ability to strongly lead economic growth in Japan as demand in China and the US is slowing down," said Taro Saito, economist at the NLI Research Institute.
Okasan Research Institute economist Yuichiro Noda said exports were seen easing as US economic growth slowed -- but the impact of high oil prices on imports was also seen declining in the months ahead.
"I think the oil price may increase import values going forward but I think it is possible we've passed the peak," Noda said. "I think September's figures will show oil did not have as much of an impact as in August."
Exports of scientific optical instruments such as semiconductor manufacturing equipment boosted by Asian demand rose 20 percent in August, while steel exports fed by Chinese demand rose 20.5 percent, the ministry said.
Auto exports rose 4.7 percent from a year earlier.
However, crude oil imports surged 33.7 percent, adding some 100 billion yen to the import column, the ministry's Hada said. Oil product imports rose 49.5 percent, while coal was up 47.7 percent.
Japan's trade surplus with Asia was flat at 538.3 billion yen as exports rose 13.9 percent to 2.40 trillion yen but imports increased 18.7 percent to 1.86 trillion yen.
Increased Asian imports of oil-related chemicals such as naphtha trimmed Japan's trade balance with Asia, Hada said. Exports of scientific optical instruments rose 26.8 percent, while imports of semiconductors and electrical parts rose 19.8 percent.
Japan's surplus with the United States shrank 0.2 percent to 472.1 billion yen as exports rose 2.3 percent to 1.02 trillion yen, while imports rose 4.6 percent to 552.0 billion yen.
The surplus with the European Union rose 5.3 percent to 203.5 billion yen as exports rose 10.3 percent to 727 billion yen and imports gained 12.3 percent to 523.5 billion yen.