Japan Yanks On The Economic Reins

Tokyo opts for another year of slow growth-and an export surge

To an American trade hawk, it may seem Japan's Ministry of Finance was up to its old tricks. Responding to warnings from U.S. Trade Representative Charlene Barshefsky, Finance Minister Hiroshi Mitsuzuka in early June said that Japan's surging trade surplus is "a passing phenomenon." Just two days later, Tokyo revealed that Japan's current-account surplus for April nearly doubled, to $9.8 billion, from the year before. Most economists expect the surplus to keep ballooning for the rest of the year. Meanwhile, Tokyo is suppressing demand for imports by hiking taxes and cutting spending, slowing the economy just as it is gathering speed.

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