Tokyo, Nov. 14 (Bloomberg) -- Japan's current account surplus widened more than expected in September as people canceled overseas vacations after the terrorist attacks on the U.S., and companies and consumers bought fewer imported goods. The current account surplus, the broadest measure of the flow of goods, money and services in and out of Japan, widened to 1.21 trillion yen ($10 billion), seasonally adjusted, from 868.4 billion yen in August. Economists had expected a 950 billion yen surplus. A decline in exports has forced companies such as Funai Electric Co. and Murata Manufacturing Co. to slow production, reducing the need to import parts and materials. The drop in overseas travel, which is tallied as an import, is also adding to the current account surplus. ``Exports will remain weak in the next few months, and now imports are dropping as well,'' said Tomoko Fujii, senior economist at Nikko Salomon Smith Barney Ltd., who says Japan won't see even a ``muted'' recovery earlier than August next year. ``Basically, the economy is shrinking.'' Imports fell 0.5 percent in September from August, and exports rose 1.7 percent after dropping five of the previous six months. That pushed the trade surplus up to 795.4 billion yen from 716.2 billion yen in August. The decline in imports ``is a sign of how weak Japan's economy has become,'' said Takeshi Minami, a senior economist at UFJ Capital Market Securities. Long Recession The government forecasts the second-largest economy will shrink 0.9 percent this fiscal year, the worst decline since 1980. Central bank policy makers expect gross domestic product to keep falling in the fiscal year through March 2003, pushing Japan into its longest recession since the so-called `Bubble Economy' burst in the early 1990s. Funai, the largest maker of videocassette recorders, yesterday cut its full-year profit forecast 17 percent as demand and prices slumped. It lowered its sales target 10 percent. Murata, the largest maker of ceramic capacitors to regulate electricity in mobile phones and computers, said fiscal first-half profit fell 70 percent as sales of parts to cell phone and computer makers dropped. Overseas Travel International bookings at Japan Airlines Ltd., Asia's largest airline, plunged 40 percent in October. Bookings may fall even more after an American Airlines jet crashed into a New York neighborhood shortly after take-off yesterday, killing all 260 people on board. The services deficit, which includes overseas travel, narrowed to 443.2 billion yen, seasonally adjusted, from 479.7 billion yen in August. People spent 27 percent less on overseas travel in September than they did a year ago, a government survey of Japan's 13 biggest travel agencies showed earlier this month. The income account surplus, which tracks the flow of dividends and interest payments, rose to a record 928.4 billion yen from 746.8 billion yen as companies brought home profits from foreign securities ahead of the end of the fiscal half on Sept. 30. From a year earlier, the current account surplus widened to 1.61 trillion yen from 1.46 trillion yen last September. In the first fiscal half, the surplus fell to 5.2 trillion yen from 6.8 trillion in last year's first fiscal half, as exports plunged 37 percent and imports fell 7.1 percent. That's the smallest it has been since the second fiscal half of 1996.