Rising energy prices impact Japan's 2021 trade balance

Japan's current account surplus in fiscal 2021 shrank 22.3 per cent to 12.64 trillion yen (US$97.6 billion) as surging energy prices caused the trade balance of the resource-poor country to deteriorate, the Finance Ministry said yesterday.

The current account balance, one of the widest gauges of international trade, declined for the fourth consecutive year to its lowest level since fiscal 2014, as Russia's aggression against Ukraine pushed up oil and gas prices, according to a preliminary report released by the ministry.

Imports jumped 35 per cent in value terms to a record 87.15 trillion yen as purchases of crude oil and coal doubled while those of liquefied natural gas expanded 58.8 per cent, the data showed. The global economic recovery from the coronavirus pandemic fallout also contributed to the spike in energy prices.

Japan's import costs were further inflated by the recent rapid depreciation of the yen against the US dollar, a ministry official said. The US dollar averaged 112.38 yen in fiscal 2021, up 5.9 per cent from the previous year.

Exports grew 25.1 per cent to a record 85.50 trillion yen, lifted by a 33.9 per cent increase in semiconductor-manufacturing equipment shipments that reflected booming global chip demand.

The nation's trade balance posted a 1.65 trillion yen deficit in the year that ended March, following a 3.78 trillion yen surplus in fiscal 2020.

Service trade, which includes cargo shipping and passenger transportation, registered a 4.80 trillion yen deficit.

The red ink grew from a 3.54 trillion yen deficit a year earlier as Japanese companies paid more to purchase software and cloud services from foreign companies to promote teleworking amid the pandemic, the official said.

The travel balance, which reflects money spent by foreign visitors in the country on services and goods against the amount Japanese spent abroad, posted a 191.4 billion yen surplus, following a 255.9 billion yen surplus the previous year. In the pre-pandemic fiscal 2019, Japan saw a surplus of 2.46 trillion yen.

In March alone, Japan logged a current account surplus of 2.55 trillion yen, marking the second consecutive month of black ink, helped by an expansion in primary income, which reflects returns on overseas investments.