LETTING THE AIR OUT OF JAPAN'S PUFFED-UP SURPLUS
Although Japan's trade surplus rose $14 billion last year, it now is in a downtrend that should accelerate in coming months, predict economists at Morgan Guaranty Trust Co. Much of the rise in recent years, they note, was the result of the impact of the soaring yen combined with falling dollar prices of imported commodities. Now, these trends seem to be ending--and perhaps reversing.
With the trade-weighted yen up more than 25% last year, import volumes have been soaring--even as Japanese consumption remains depressed and export volumes decline. America's motor-vehicle exports to Japan, for example, jumped by 50% in 1993, and the Japanese-U.S. trade surplus has slipped recently. Ironically, just as the rising yen in recent years pushed up Japan's trade surplus in dollars, a weakening yen at this juncture, says Morgan, would cause the surplus to shrink more rapidly.GENE KORETZ