By Keiko Ujikane
Dec. 8 (Bloomberg) -- Japan’s current-account surplus narrowed for an eighth month in October as a deepening global slowdown caused exports to fall.
The surplus shrank 56.5 percent to 960.5 billion yen ($10.4 billion) from a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for the gap to narrow to 1.09 trillion yen.
Exports slumped the most in seven years, worsening Japan’s first recession since 2001, as the worldwide financial crisis choked off demand for the country’s cars and electronics. The yen’s 20 percent gain against the dollar is adding to exporters’ woes and eroding the value of investments Japanese have overseas.
“Exports will probably stay weak because of slowing global demand, taking a toll on Japan’s economy,” said Susumu Kato, chief economist at Calyon Securities in Tokyo. “The stronger yen also hurt exporters’ earnings and trimmed interest made on securities investments abroad.”
Shipments abroad fell 7.3 percent in October from a year earlier, the most since December 2001, today’s report showed. Imports climbed 8 percent, a quarter of the pace of September’s 33 percent, as energy costs fell.
Crude oil traded at $77.48 a barrel in October on average, falling from a record $147.27 a barrel on July 11. Japan gets virtually all of its oil from abroad.
The income surplus, the difference between money earned abroad and payments made to foreign investors in Japan, shrank 16.3 percent to 1.21 trillion yen from a year earlier because of the yen’s appreciation. Japan’s currency surged 7.8 percent against the dollar in October, the biggest monthly gain since December 1998.
The current account tracks the flow of goods, services and investment income between Japan and its trading partners. It includes trade not shown in the customs-cleared balance.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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