Japan's current account shrinks

 11 May 2011 Last updated at 20:56 ET  Japanese automakers have been working at reduced capacity after the earthquake and tsunami Japan's current account surplus fell by 34.3% in March compared with the same month a year ago, after a massive quake and tsunami devastated exports.

The drop was sharper than forecast. Economists had expected the current account, the broadest measure of trade, to fall by 31.3%.

The current account surplus was 1.68 trillion yen ($20.7bn; ￡12.7bn) in March.

The 11 March earthquake was one of the worst ever recorded in Japan.

The earthquake and ensuing tsunami have left 28,000 people dead or missing.

'Gradual recovery'

The twin disasters immediately affected factory output at home and also supply chains around the world.

"Exports are weak and we are importing things that we weren't able to make domestically," said Shuji Tonouchi of Mitsubishi UFJ Morgan Stanley Securities.

"Some factories are starting to increase production, so we are heading toward a gradual recovery, but there are still risks from the electricity supply."

Economists believe exports will take time to recover, while imports will surge, as the country brings in fuel and commodities to feed the reconstruction.