Tokyo, Feb. 10 (Bloomberg) -- Japan's current account surplus shrank in December as exports fell for the first time in four months, adding to evidence the world's No. 2 economy may have contracted last quarter. The surplus narrowed 1.3 percent to a seasonally adjusted 986.7 billion yen ($8.2 billion) from 1 trillion yen in November, the Ministry of Finance said. Economists had expected the surplus to fall to 919.5 billion yen, according to the median of 10 forecasts in a Bloomberg news survey. Exports fell 4.7 percent from a month earlier on a current account basis, snapping a three-month gain. A decline in exports, which make up about a tenth of the economy, makes it more likely that the economy will enter a fourth recession in a decade, economists said. ``There's nothing positive in the economy that would suggest that exports or production will recover,'' said Kiichi Murashima, an economist at Nikko Salomon Smith Barney Ltd. in Tokyo. The yen was at 120.33 to the dollar at 2:31 p.m. in Tokyo from 120.29 late Friday in New York. Slowing demand from the U.S., the biggest overseas market for Japanese goods, isn't helping exports. Growth in the U.S., the world's largest economy, slowed to an annual pace of 0.7 percent in the fourth quarter from 4 percent in the third. That may hurt sales at Japanese manufacturers such as Oki Electric Industry Co., the world's No. 1 maker of low-capacity memory chips. Oki Electric Industry last week cut its sales forecast by 3 percent to 600 billion yen for the year ending March 31.
GDP Report
The economy probably shrank 0.4 percent in the fourth quarter, hurt by a drop in consumer spending and declining business investment, gross domestic product figures Friday will show, according to the median forecast of 36 economists in a Bloomberg News survey. Exports have been propping up Japan's economy this year as consumers curb spending amid falling wages and job cuts. Household spending fell for a third month in December, a report last week showed. Consumer spending accounts for more than half the economy and was probably the biggest drag on gross domestic product in the fourth quarter, economists said. The current account is the broadest measure of trade because it includes investment and services. From a year earlier, the surplus narrowed 1.4 percent to 892.9 billion yen from 905.9 billion yen, the ministry said. For 2002, the current account surplus rose 34 percent to 14.2 trillion yen. The trade surplus widened 38 percent to 11.7 trillion yen, the first gain in four years, because exports rose and imports fell. The services deficit, which reflects tourism and other services, narrowed to 5.16 trillion yen last year from 5.32 trillion yen in 2001. The income surplus, which reflects income from overseas investments that is brought back to Japan, fell to 8.28 trillion yen, the third drop in four years. //www.quote.bloomberg.com/