1st LD Writethru: Japan's current account surplus hits record low in 2014

Japan's current account surplus fell 18.8 percent from a year earlier to 2.63 trillion yen (22.10 billion U.S. dollars) in 2014, the smallest level since comparable data became available in 1985, government data showed on Monday.

The current account surplus, one of the widest gauges of international trade, has shrunk for the fourth consecutive year, the Finance Ministry said in a preliminary report, suggesting a surge in gas imports and the yen's drop were the main reasons.

Exports in 2014 gained 9.3 percent from the previous year to 74. 12 trillion yen, while imports soared 10.3 percent to 84.49 trillion yen. Thus, the trade deficit, imports minus exports, grew 18.1 percent to a record 10.36 trillion yen, said the ministry.

The trade deficit was underpinned by record imports, partly led by Japan's heavy reliance on liquefied natural gas imports to make up for the shutdown of nuclear plants for safety checks following the March 2011 Fukushima crisis.

In the reporting period, the surplus in the income account, which reflects how much Japan earns from its foreign investments, rose 9.7 percent to a record high of 18.07 trillion yen, supported by higher dividends and profits from securities investments on the back of the yen's drop.

The yen declined versus the U.S. dollar by 8.3 percent from the previous year on an average basis of 2014.

The narrowing surplus has raised concerns that a persistent trade deficit may tip the current account into the red over the medium term. However, some analysts think the crude oil prices' decline globally may help narrow the trade gap.

"Trade deficits caused a smaller current account surplus. But given a declining trend in trade deficits due to cheaper oil prices, I expect balance of payments to expand this year," said Koya Miyamae, senior economist at Nikko SMBC Securities. Endi