“As a weak yen and commodity price hikes run their course, imports will be on decline, which will cause trade deficits to narrow,” said Kenta Maruyama, economist at Mitsubishi UFJ Research & Consulting.
“Recovery in inbound tourism will also help service deficit to contract. As a result, current account surplus will expand gradually from now on,” he said. That reflected the trend in which the country increasingly earns income from capital parked abroad rather than sales of goods and services. The data underscores the pain that high energy costs and a weak yen were inflicting on Japan’s economy, the world’s third biggest, which relies heavily on imports of fuel and raw materials.
Japan’s position as an export powerhouse has also waned in recent years, in part because companies have moved production overseas, making overseas investment a pillar of the country’s earning power.