Recent Developments in the External Balance

Japan has continuously run a current-account surplus since fiscal 1981, though the rise of the surplus has fluctuated widely. The ratio of current-account surplus to GDP expanded rapidly in the first half of the 1980s, reaching 4.4 percent in fiscal 1986. It then declined to 1.3 percent in fiscal 1990, reflecting the appreciation of the yen after the Plaza Accord and the expansion of domestic demand. The current-account surplus expanded once again during the economic recession of 1991-93, but is now decreasing rapidly.