After half a century of trade surpluses, Japan is now in deficit

IMBALANCES are not for ever. In the 1980s and 1990s, Japan’s huge trade surplus was a popular target for American and European protectionists. No longer. Provisional estimates suggest that Japan’s merchandise trade moved into the red in 2011—its first annual deficit (excluding freight costs) since 1963. Japan remains the world’s biggest net foreign creditor. Income from its assets more than offset the trade gap, keeping its current account in surplus, equivalent to about 2% of GDP (down from 5% in 2007, see chart). That surplus, however, could also disappear within a few years. Is that good news or bad?

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