Japan'S Trade Surplus Shows 31% Fall

Rising oil prices contributed to a 31 per cent decline in Japan's trade surplus to Y369.47 billion (£2.15 billion) in August compared with the same month last year, the 21st consecutive monthly fall, the finance ministry said on Wednesday

The fall was less steep than the markets had expected but will help ensure that trade differences stay in the background when Prime Minister Ryutaro Hashimoto meets US President Bill Clinton in New York next week, for a summit in the margins of the United Nations General Assembly.

A finance ministry official said the trend was expected to continue, though private-sector economists warned that the decline was slowing as a weaker yen lifted the competitiveness of Japanese exports. In July, the surplus was down by 38.4 per cent.

The politically sensitive bilateral surplus with the US decreased by nearly 17 per cent to Y222.3 billion, much faster than the 6.5 per cent fall in July and the 18th consecutive month of decline. Japan's surplus with the European Union was down by 17 per cent last month and the surplus with the rest of Asia by 11.4 per cent compared with the same month last year.

Within the total surplus, exports rose by 8.7 per cent to Y3,472 billion, easily outrun by the growth in imports, up 16.6 per cent to Y3,102 billion.

The ratio of finished products to total imports rose a fraction to 59.4 per cent, a reflection of Japan's continuing shift from a nation of processors of raw materials for re-export, to consumers.

Import growth, however, was unusually swollen by a 54 per cent rise in Japan's monthly oil bill and by the purchase of three large aircraft from the US. Other data suggest that domestic demand has weakened. Exports were helped by the weakness of the yen.