Skip to main content

The Globe and Mail

Japan revises first-quarter growth to 1.2%

A man checks share prices as others walk by the electronic stock board of a securities firm in Tokyo, June 7, 2012.

Koji Sasahara/AP

Japan's current account surplus unexpectedly fell from a year earlier in April in a sign that a slowdown in China is weighing on demand for the nation's exports and casting doubt on the strength of its economic recovery.

First-quarter economic growth was revised up to 1.2 per cent from initially reported 1.0 per cent, reflecting upward revisions in capital spending and private consumption, separate data also showed on Thursday.

However, Japan's current account surplus fell 21.2 per cent compared with the median estimate for a 2.8 per cent annual increase and followed an 8.6 per cent decline in the year to March.

Story continues below advertisement

That suggested the world's third-largest economy was struggling to maintain traction gained in the first three months of the year when it expanded at an annualized pace of 4.7 per cent according to the revised data, faster than any other Group of Seven economy.

The current account, a broad measure of trade and other investment flows, is likely to remain in surplus due to earnings on Japan's extensive holdings of overseas assets, helping the country finance its large public debt burden.

The surplus could shrink as China's slower pace of growth and Europe's sovereign debt crisis threaten to harm the global economy and crimp demand for Japanese goods.

Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute, said, however, a recent retreat in oil prices could help.

"Although energy imports remain high in terms of volume, I don't see current account surplus dwindling in the near term thanks to falling oil prices," he said.

"Headline figures came a little weaker than expected. But Japan's exports seem to have bottomed out, and will likely pick up in the latter half of the fiscal year (to March, 2013) along with recovery in the global economy."

The current account surplus stood at ¥333.8-billion ($4.20-billion U.S.), below a median forecast for a ¥450.3-billion surplus in a Reuters poll, Ministry of Finance data showed on Friday.

Story continues below advertisement

Economists polled by Reuters had expected Japan's gross domestic product growth to be revised up to 1.1 per cent.

The current account balance deteriorated sharply last year as exports slumped and fuel import costs surged after the devastating March, 2011, earthquake, which led to closure of all of Japan's nuclear power plants.

The government is having difficulty convincing the public that it is safe to restart some of the reactors, so the country must rely on more-expensive thermal power that requires fuel imports and puts pressure on the trade balance.

A smaller-than-expected increase in exports in April, according to customs-cleared trade data released last month, has raised concern that overseas demand is waning, which could slow Japan's export-dependent economy.

Report an error
As of December 20, 2017, we have temporarily removed commenting from our articles as we switch to a new provider. We are behind schedule, but we are still working hard to bring you a new commenting system as soon as possible. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to