Japan Surplus To Fall, But More Slowly

A Reuters poll of economists showed forecasts for the surplus averaging 495.5 billion yen ($4.54 billion), down from 781.5 billion yen ($7.16 billion) a year ago. Estimates ranged from 425 to 567 billion yen ($3.90 to 5.20 billion).

The surplus is diminishing, but the falling tempo would decelerate clearly, Masanobu Takahashi, director at Sanyo Investment Research, told Reuters Financial Television. The data will be announced on Monday at 8.50 a.m. (2350 GMT Sunday).

The current account balance of payments comprises exports and imports of actual goods as well as payments and receipts for invisible items such as shipping, banking and tourism.

Concerning merchandise trade, exports would have rebounded in July due to an increase in automobile exports, economists said.

The level of imports stayed high, they said, but the pace of growth has peaked out somewhat. This is essentially a response to the weakening of the yen (against the dollar) that we saw in the past year, Peter Morgan, a senior economist at James Capel Tokyo, told RFTV.

Some economists said that Japanese companies' moves to shift their production overseas have peaked out, while others said the trend was still continuing, although the pace may quicken or slow depending on moves in currency rates.

Hiroshi Suzuki, an economist at Norinchukin Research Institute, said he would like to see whether the rebound in exports was just a temporary trend or a lasting one.

It's hard to judge from one month worth of merchandise trade, but there's definitely been a change. We're keeping a close watch to see whether the trend has altered, Suzuki said. The deficit in services might expand as many Japanese took off for overseas destinations during their summer holidays.