RECENT TRENDS IN JAPAN-U.S.
ECONOMIC RELATIONS

Free market Forces Yield Balance of Trade Improvement

Q.

What are the current trends of Japan's trade with the world?

A.

(1) There is a downward trend in Japan's trade surplus with the world. Japan's external trade surplus with the world fell by 11.6% in 1995 on a dollar basis. Month-to-month comparison to the same period of the previous year from December 1994 through January 1996, showed 14 consecutive months of its decline on a yen basis as well as seven consecutive months of its decline from July 1995 through January 1996 on a dollar basis. The decreasing trend in Japan's trade surplus with the world is projected to continue.

(2) There is also a downward trend in the ratio of Japan's current account surplus to GDP. The ratio of Japan's current account surplus to GDP fell from 3.2% in 1992 to 2.8% in 1994. As of October 1995, the IMF World Economic Outlook projected that this figure would fall to 2.3% for 1995 and 2.0% for 1996.