Japan's Balance of Payments for 2000
May 31, 2001
Bank of Japan
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Summary
A. Overall Trends
In the balance of payments for 2000, the current account surplus registered 12.6 trillion yen, an increase from the surplus of 12.2 trillion yen in 1999. The capital and financial account recorded a net outflow of 9.1 trillion yen, up from a net outflow of 5.4 trillion yen in 1999, a rise primarily reflecting movements in the financial account. The net increase in reserve assets marked 5.3 trillion yen, down from the 8.8 trillion yen of 1999.
B. The Current Account
The current account surplus expanded by 3.7 percent from the previous year, after a decrease in 1999. This was due to a contraction in the deficit in the net balance of services, a larger income surplus, and a decrease in the current transfer deficit.
The trade balance surplus shrank for the second consecutive year.
The value of exports increased for the first time in three years, growing by 8.1 percent from the previous year and marking the second highest level historically (the highest was in 1997). The increase reflected a significant growth in Asia-bound exports of capital goods and parts related to electronics and information technology (IT).
The value of imports also increased for the first time in three years, expanding 16.2 percent year on year and marking the second highest level historically (the highest was in 1997). Imports from Asia and the Middle East mainly supported this growth, which was backed by (1) a surge in crude oil prices, (2) an increase in IT-related demand in the domestic market, and (3) a rise in the overseas procurement rate.
The deficit in the services account contracted for the fourth consecutive year, reflecting the decline in the deficit in the travel account and the deficit of other services (financial services, royalties and license fees, and other business services).
The surplus in the income account expanded after a decrease in 1999. This was partly due to the increase in (1) the surplus in direct investment income prompted by the recovery in the profits of the overseas subsidiaries of Japanese corporations, and (2) the surplus in portfolio investment income resulting from the narrowed deficit registered in interest rate swaps.
The deficit in current transfers shrank for the first time in eight years. This was because in 2000 no large contribution (debit), such as that made in the previous year, was made to the Asian Currency Crisis Support Facility.
C. The Capital and Financial Account
Investment in Japanese bonds and notes by nonresidents registered the highest net purchases (inflow) since 1991, while investment in Japanese equities by nonresidents saw a shift to net sales (outflow) for the first time since 1990 against the backdrop of a decline in U.S. stock prices.
In investment in foreign bonds and notes by residents, banks actively purchased U.S. and European bonds in the expectation that interest rates would decline, while life insurance companies and trust banks restrained their purchases. Net purchases (outflow) of investment in foreign equities by residents declined from the previous year reflecting the drop in stock prices worldwide.
Inward direct investment by nonresident corporations remained high reflecting the global industrial reorganization. Outward direct investment showed the largest net outflow since 1991.
