* This is an English translation of Japanese original released on March 24, 2008.

July 31, 2008
Bank of Japan
International Department

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I. Summary

Japan's current account surplus increased to 25.0 trillion yen in 2007, up from 19.8 trillion in 2006, marking a new record high for the second consecutive year. This was mainly due to the growth of the surpluses in the trade and income balances. The capital and financial account deficit (net outflow) increased to 21.9 trillion yen in 2007, up sharply from 12.5 trillion yen in 2006, reflecting the increase in net outflows of "other investment." Reserve assets continued to increase, registering 4.3 trillion yen in 2007, up from 3.7 trillion yen in 2006. Balance of payments data for the whole of 2007, the second half of 2007, and the fourth quarter of 2007 in this report are preliminary unless otherwise stated.

In balance of payments statistics, the following relationship holds true at all times:
Current account + capital and financial account + changes in reserve assets + errors and omissions = 0. Japan's balance of payments for 2007 shows that the current account surplus earned is mirrored by reverse flows abroad in the form of a capital and financial account deficit (outflows) and an increase in reserve assets.

Figure 1: Balance of Payments

Note: "p" denotes preliminary data. The same applies to the remainder of the report.

Table 1: Japan's Balance of Payments

Notes:
1.	Negative figures represent capital outflows. Negative figures in "Changes in reserve assets" represent an increase in reserve assets.
2.	Figures for portfolio investment and other investment exclude securities lending transactions.

Notice

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