Japan's dramatic swing from surplus to deficit in its international accounts may have gone too far, a leading Japanese government official said in an interview here last week.
Michiya Matsukawa, a senior adviser to the Japanese Ministry of Finance who is well-known in international financial circles, said "an overswing" in Japan's balance of payments for fiscal 1979 will produce a deficit of "some billions."
Originally, the Japanese government had forecast a surplus of $7.5 billion in its current account, a sharp decline from a surplus of $12 billion in fiscal 1978. (The Japanese fiscal year ends in March of the following calendary year). But oil prices increases alone boosted import costs by $7 billion, Matsukawa explained. In addition, emergency imports arranged for earlier accounted for another $2.5 billion, while stronger domestic demand is attracting still more imports.
The net result will be a current account deficit of about $2 billion to $5 billion for fiscal 1979, Matsukawa estimated. That implies a reduction in Japan's fiscal 1979 worldwide trade surplus to about $4 billion to $7 billion.
A surplus of this size would be a dramatic illustration of changing world events. A year ago, the Japanese government estimated a $7.5 billion current account surplus and a trade surplus of $16.9 billion, down only modestly from the $20.6 billion trade surplus in fiscal 1978 that had agitated its trading partners in the U.S. and Europe.
If Japan's actual worldwide trade surplus turns out at the midpoint of Matsukawa's estimate -- say $5.5 billion -- there will have been a "swing" against Japan of $15 billion in a single year.
Japan's trade surplus with the United States also is diminishing. Matsukawa said that, for the first half of calendar 1979, the surplus had narrowed to $2.6 billion, implying less than $6 billion for the whole year compared with $10.1 billion in calendar 1978.
The Japanese trade data is calculated on a customs-clearance basis, and the aggregate numbers tend to be smaller than those used by the U.S. But the trend is the same in both accounts.
Matsukawa, enroute home after visiting Brussels, Frankfurt and Bonn, reported that he was relatively more optimistic than some others on next years' economic outlook for the industrialized countries. "I don't expect a rosy picture, but things won't be as bad as (in the steep recession of) 1974-75," he said. "We will have a modest, low growth next year." He said U.S. officials were a bit more optimistic than "what you read in the newspapers."
The latest Organization for Economic Cooperation and Development forecast for the industrialized countries, made just after the last oil price boost by the Organization of Petroleum Exporting Countries, was for a real growth rate of 2 percent in the 12 months running to mid-1980. Lately, many forecasters have concluded that the OECD forecasts is on the optimistic side.
Apart from concern about his country's current account deficit and inflation, Matsukawa also gave an upbeat account of Japanese economic prospects.
He said that after the unexpected blow of the June OPEC price increase, the Japanese economic growth forecast of 6.3 percent for this year was lowered to 5.5 percent. But the surprising strength of both consumer buying and business investment has restored growth prospects to "something close to 6 percent," Matsukawa said.
Japanese officials are edgy about inflationary pressures.The consumer price index rose by a rate of 4.3 percent in July, well below European and American inflation rates. But the wholesale price index has begun to hit double-digit levels. And, like other oil-consuming countries, Japan worries about yet another OPEC price increase.
Matsukawa reported that scuttlebutt in Europe discounts the possibility of an OPEC price boost in September. But oil-price watchers think a December price increase likely if the cost of goods imported by OPEC countries continues to go up, he said.
On international financial matters, Matsukawa indicated that, although the official Japanese view is "still to be worked out," chances are his government will support in principle creation of a "substitution account" in the International Monetary Fund at its annual meeting in about a month in Belgrade.