Japan's current account surplus marked a record low in fiscal 2012 as exports to China and Europe slackened and fossil fuel imports surged, the government said Friday.
A record deficit in global trade of goods and services of 9.48 trillion yen brought the country's annual current account surplus, one of the widest gauges of international trade, to 4.29 trillion yen in the year that ended March 31, the Finance Ministry said in a preliminary report.
The surplus, the smallest since comparable data became available in 1985, plunged 43.6 percent from the year before. It was below the previous record low of 5.58 trillion yen set in fiscal 1990, when crude oil prices spiked against the backdrop of the Persian Gulf crisis after Iraq invaded Kuwait.
Amid growing expectations of a recovery in exports with the yen sharply sliding, the government could be forced to map out measures to curb the outflow of financial assets as the country imports more than 90 percent of its energy resources from overseas.
In fiscal 2012, exports fell 1.7 percent on year to 61.57 trillion yen, while imports climbed 3.6 percent to 68.47 trillion yen. The annual goods trade balance -- exports minus imports -- consequently fell into the red for a second straight year.
A downturn in the European economy, triggered by the eurozone's sovereign debt crisis, has weighed on Japan's exports to the region, while a territorial row over a group of uninhabited islands in the East China Sea dragged down Japan's shipments to China, its biggest trading partner.
Imports, meanwhile, have been soaring, as demand for natural gas and oil has been increasing from utilities boosting fossil fuel-based power generation as an alternative to stalled nuclear power generation after the accident at the Fukushima Daiichi power plant, crippled by the March 2011 quake-tsunami disaster.
Some analysts, however, say a weaker yen, driven down by Prime Minister Shinzo Abe's policy of pushing for bolder monetary easing by the Bank of Japan to beat deflation and hopes for U.S. economic recovery, could help exports rebound and improve Japan's trade balance ahead.
The U.S. dollar topped 100 yen for the first time in more than four years in New York on Thursday after the release of better-than-expected jobless claims in the world's largest economy.
With the value of the yen declining, Japan's trade deficit "is likely to shrink, which could help improve its current account balance," said Tsuyoshi Ueno, a senior economist at the NLI Research Institute.
A Finance Ministry official said the government will "monitor developments in economic conditions both at home and abroad, foreign exchange rates and prices of liquid natural gas and oil," noting that the trade balance has a major impact on the account balance.
A falling yen usually supports exports by making Japanese firms' products cheaper abroad and increases the value of overseas revenue in yen terms, though it also hoists import prices.
The income account, which reflects how much Japan earns on its foreign investments, marked a surplus of 14.72 trillion yen in fiscal 2012, up 5.1 percent.
In March alone, Japan's current account balance logged a surplus for the second month in a row. The surplus stood at 1.25 trillion yen, with exports rising 0.3 percent and imports gaining 3.9 percent from a year earlier.
The goods and service trade saw a deficit of 219.4 billion yen, but the income account posted a surplus of 1.71 trillion yen.