Japan current account deficit hits record 1.6t yen

JAPAN suffered a record current account deficit of nearly 1.6 trillion yen (S$19.64 billion) in January, as surging winter demand for oil and gas sent import costs soaring on the back of a weaker yen. This has triggered fears that Japan's external payments position could end up in deficit for the current fiscal year as a whole. This would, in turn, indicate that Japan was becoming a net importer of capital on a long-term basis, which could send a "sell" signal to investors in Japanese government bonds at a time when government borrowing is at the highest among advanced economies, some economists say.

News of the latest current account deficit - the fourth consecutive monthly deficit - came as the government revised down earlier estimates of gross domestic product growth in the fourth quarter of calendar 2013 from an annual one per cent to 0.7 per cent.

Reflecting the continuing deterioration in Japan's balance-of-payments position, Prime Minister Shinzo Abe told Parliament yesterday that it was "necessary to build a strong economy to avoid a sharp change in the current account balance". He urged measures such as taking advantage of growth in emerging Asian economies to boost exports, Kyodo news service reported, but trade and inflation data released at the weekend pointed to a slowing in the world's leading emerging economy, China, which is also Japan's largest single trading partner.