JAPAN TRADE SURPLUS WILL GROW AGAIN IN 1987, OECD
Japan's trade surplus is likely to
continue to grow in 1987, as sales of Japanese goods abroad
increase while domestic demand remains sluggish, the
Organization for Economic Cooperation and Development (OECD)
said.
    In its latest half-yearly review of the world economy, the
OECD said Japan managed to considerably reduce its surplus last
year, when domestic demand grew by four pct in 1986 while
export markets rose by only two pct.
    But it said this differential between the growth of
domestic and foreign demand would reverse in 1987 and 1988,
"thus weakening the international adjustment process."
    It forecast a slowing in domestic growth to little over two
pct but with a rise in exports of 3.3 pct in 1987 and 3.6 pct
in 1988. As a result, the current account surplus in 1987 will
rise to 95 billion dlrs from 86 billion in 1986, although in
1988 it should fall back to 87 billion dlrs.
    The OECD outlook did not take account of the 6,000 billion
yen package announced last month to stimulate domestic demand
and increase imports to Japan. However, OECD officials said the
measures will significantly strengthen domestic demand, quite
possibly exceeding one pct GNP when the full effects have
worked through, and thus will provide some stimulus to imports.
    The OECD outlook said, "Continued large current account
surpluses and the further build-up of an already-substantial
net external asset position could well lead to upward pressure
on the yen." It said that further appreciation could then lead
manufacturers to postpone their investment plans and thus
weaken domestic growth.
    The OECD said Japan's Gross National Product was likely to
gorw an annual two pct in 1987 and 1988, below 1986's 2.5 pct
growth. But it said Japan would continue its good performance
on inflation, with a zero figure expected in 1987 compared to a
0.6 pct rise in consumer prices last year.
 Reuter
