TOKYO (Reuters) - Japan posted a much lower-than-expected current account surplus in March on weak demand for exports and rising imports, reinforcing recent signs that the recovery in the world’s third-biggest economy is being hampered by slow shipments.
The surplus stood at 116.4 billion yen (676 million pounds), much less than the median forecast for a 305.0 billion yen surplus, finance ministry data showed. That was also well below a 612.7 billion yen surplus in February.
Imports jumped in March partly due to increased demand before a sales tax increase at the start of April.
Excluding this one-off factor, economists say the data shows that a steady shift of manufacturing capacity overseas means Japan can no longer export its way to growth, and that it needs to boost its services sector to rebalance its economy.
“The current account surplus could stabilise in the second quarter,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.
“But structural changes mean exports are likely to remain weak. We need to respond to this change by increasing productivity in the services sector to meet domestic demand.”
Imports jumped an annual 23.2 percent in March, the data showed. On the other hand, exports rose only 6.2 percent from the previous year.
Some companies used their domestic manufacturing capacity to meet a pick-up in demand before the sales tax hike, which resulted in lower exports.
However, exports have been weak for some time as a structural shift in manufacturing to overseas markets has diminished Japan’s status as an export-led economy.
The soft shipments have raised worries of a stumble in the economy as the effects of Tokyo’s aggressive fiscal and monetary stimulus have largely faded.
Some analysts say that if exports remain feeble, the Bank of Japan may be forced as soon as July to expand its stimulus by ramping up its purchases of government bonds and other assets.
And there are growing signs that policymakers are becoming less confident about an export upturn.
Japan’s economy probably grew the most in a year in January-March as consumers rushed to buy goods to beat the April 1 sales tax hike, a Reuters poll showed, but analysts say weak exports pose a major risk ahead that might warrant fresh stimulus.
Tame external demand is likely to have cut some of the economic gains, underlining a concern that exports could remain a drag on the economy in the current quarter while domestic demand takes a hit from the sales tax hike.
The cabinet office will release the data on May 15.
Japan’s current account balance came under pressure last year as the trade balance recorded a string of deficits due to the rising energy bill and disappointing exports.
Reporting by Stanley White; Editing by Edmund Klamann