By Kantaro Komiya

TOKYO, Reuters – Japan’s current balance balance retreated from the second-largest deficit in the preceding month to return into the black. This provided some relief for policymakers in light of a decline in fundamental economic conditions.

Japan’s recent trade deficit has been exacerbated by rising fuel costs and a weakening Japanese yen. This is more than offsets heavy investment returns and pushes the country’s balance sheet into the red.

Finance ministry data on Friday showed that the third-largest country in the world posted a current surplus of 1.6483 trillion Yuan ($13.28 Billion) in February. This was against a median market forecast of a surplus at 1.4368 trillion Yuen.

This was followed by a January deficit of 1.1887 trillion Japanese yen, which is the second largest shortfall according to comparable data since 1985.

Trade deficit fell to 176.8billion yen, from 1.6043 trillion in January.

According to data, the primary income surplus grew to 2.2745 trillion trillion yen (from 1.2813 trillion trillion yen) but was still lower than last month due to declining foreign investment returns.

A smaller trade deficit and a larger surplus of primary income helped to push the current account into positive territory.

Japan’s vulnerability to rising fuel and material costs is especially acute, since it largely depends on imported energy for its livelihood. This adds to the uncertainty surrounding Japan’s already fragile recovery after the pandemic.

Analysts have cautioned that Japan’s worsening trade terms and current balance could cause market distrust in Japan’s ability pay back its debt.