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Monday, May 17, 1999 Published at 06:40 GMT 07:40 UK


Business: The Economy

Bad news: a record trade surplus

Japan's unemployed crowd the job centres as the economy struggles

Japan's economy has chalked up a record trade surplus during the year ending on 31 March 1999, rising 17.6%.

However, the figures are not proof of the country's economic strength but are a sign of its troubles, as they are caused by weak domestic demand.

The Japanese Finance Ministry said the current account surplus - Japan's broadest measure of trade - climbed to 15.227 trillion yen ($124bn, 76.6bn). This is about $1bn above the record set in 1992.

The surplus is actually below the ministry's predictions, but even this is a bad sign, as the 'shortfall' was caused by a larger-than-expected fall in exports, despite the stronger dollar.

Exports dropped 4.5%, as goods and services worth $389bn left the country. Hardest hit were exports to Asia, while shipments to the United States and the European Union were actually rising slightly.

Imports, meanwhile, plunged 12.9% to $258bn.

Stronger demand?

The government's massive spending plans, though, could soon change the picture.

A ministry official said: "It is always difficult to talk about the outlook ... but the conclusion ... is that it's unlikely for the current account surplus to grow bigger and bigger."

Masaaki Suzuki, economist at the Fuji Research Institute, said the "government_s steps are taking effect on the economy, with public works and housing investment clearly picking up lately.

Tomoko Fujii, a senior economist at Nikko Salomon Smith Barney, agreed, but said: "The question is how long the effects of past stimulus steps will be sustained"

He warned that "further stimulus steps will be needed in the latter half of this business year".





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