FE-2 R e p o r t N o. FE-2a This report was prepared for use within the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT THE DEVELOPMENT AND PROSPECTS OF JAPAN'S ECONOMY LBRAY EXPONOba-MMPWVZrU OlGJJIIZW AT TE¢ x!CwItUGriONS(lMM DrVTLOY1! WASUGDITON 25, D. C. July 25, 1957 \a FILE C0PY- I CURRENCY CONVERSION $1.00 = Y360 S YI = $0.00277778 Y 1,000,000 $ 2,777.78 TABLE OF CONETIT Page No. BASIC STETIJSTC ................................- SUMFY AND CONUSIONS ....................... ii-iii IHE VEEELOPM5NT PHD PROSP1 CTS OF JAPAN S ECOMNf ............................ 1 A. Recent Progress .................... 1 Factors Responsible for the Progress 2 Gains in Production ................... . 2 Recovery of Foreign Irade .... .......... 4 Expansion of Exports . .................. 5 Import Trends ........... . 6 G-eographical Distribution of Trade 6 Overall Balance of Payments ........... . 8 Financial Stability ................... 10 Improvement in Corporate Finances. 11 B. Current Situation and Prospects . .12 Signs of Strain.. 12 Investment Requirements ......... Prospects of Growth . ................... 15 S1IISTICAL APPENDIX TABLES .................... 20 E;CCvl.WDtC Ml¢01-Dr-M:TP Z!-ISrf'm BY T.FOY B.ECCNSThWA'M)ON 2A.D D. WAGc~r Z>. D. Z, (2) TLBLE OF CON'IEMTS (Cont'd) STA9ISTECAL L1PPEDTIX TKBLES Table 1 NTational Accounts Data by Fiscal Years 2 Savings Indicators: increase in Deposits and Savings 3 Indexes of Industrial Production 4 Output of Some Principal Products 5 Agricultural Prod.uction: Major Crops 6 Labor Force and Employment 7 Fluctuations in Bank Credit and Treasury Transactions 8 Public Exrenditures and Revenues 9 National Government Debt 10 Balance of Treasury Thansactions ipith the Public 11 Money Supply and Pri ces 12 Sources of Increase in Industrial Financing 13 Sources of New Financing by Industry 14 Capital Raised in 1Iarket 15 Corporate Financial Ratios 16 Orders Received by Japanese Industry for MIachinery and Ships 17 Value of Construction Starts 18 Principal Exports 19 Imports by Commodity Croups and Selected Commodities, Quantity and Value 20 Trade by Geographical Areas 21 The Development of Open Account Balances 22 Japan: Bal'ance of Payments - 1952 23 Japan: Balance of Payments - 1953 214 Japan: Balance of Payments - 1925 25 Japan: Balance of Payments - 19f5 26 Japan: Balance of Payments - l956 27 Gold and Foreign Exchange Reserves 28 External Debt Service BASIC STATISTICS Area 142,313 sq. miles Population (Estimate, October 1956) 90.3 million Gross National Product and National Incom FY 1956 Estimate (current prices) Gross National Product X 9,151.0 billion National Income X 7,610.0 ft Per Capita National Income ;Y 84,275.0 ($234) Industrial Production (March 1957) (1934-36 = 100) 240.0 National Government Budget Estimate, FY 1956 (in billions of yen) Revenue 1,108.6 Expenditure 1,089.7 Surplus 18.9 Balance of Treasur, Transactions, excluding Foreign Exchange Fund, FY 1956 (in billions of yen) / 100.1 Bank Credit, April 1957 (in billions of yen) Commercial Bank Loans and Discounts 4,327.7 Bank of Japan Loans and Discounts 272.6 Money Supply, February 1957 (in billions of yen) 909.3 Price Indexes, February 1957 (1952 = 100) Wholesale Prices 106.6 Consumer Prices 115.7 Foreign Trade, 1956 (in millions of US $) Exports, f.o.b. 2,500.6 Imports, c.i.f. 32,229.7 Balance - 729.1 Balance of Payments, Current Account, 1956 (in millions of IS Rece4ipts 3,314.0 Payments 3,362.1 Deficit - 48.1 Gold and Foreign Exchange Reserves, Narch 1957 (in millions of UB m Gross Reserves 1,426.0 Reserves Net of Short-term Liabilities 1,023.0 -1i- SUMMARY AND CONCUJSIODS 1. During the last four years the Japanese economy has made much more progress than was originally expected; and there now seems reason to hope that Japan can and will develop a self-supporting economy on a gradually rising standard of living despite the pressure of population on available resources. Gross national product and foreign trade have grown at a very rapid rate and the Japanese people are today enjoying a standard of life substantially higher than in prewar years. At the same time the economy has become considerably more diversified. 2. This progress must be attributed primarily to the capacity of the Japanese people - their ability to absorb and apply the advanced production techniques of the West; their willingness to work hard and their capacity to save. Other factors have also played a role: the sustained economnc growth in the rest of the world, which has facilitated the marketing of Japanese products; and the willingness of the United States to assume most of the burden for Japants defense, which has not only relieved the drain on Japanese resources but has continued to yield the country a substantial although declining dollar income in the form of U.S. disbursements in Japan. 3. Recently the economy has shown signs of strain. Imports have for some time been rising more rapidly than exports in order to rebuild in- ventories depleted in the past and to sustain the rapidly rising volume of production and investment. Imports were considerably liberalized in the spring of 1956 because inventories of imported raw materials had fallen to excessively low levels. While there has been some replenishment of inventories, most of the rise in imports has been caused by a notable expansion in investment which began in 1956. Despite a high overall rate of investment in recent years, it has become evident that capital formation in a number of sectors - particularly iron and steel, transport and power - has lagged behind the rise in output. In addition business in general, buoyant as the result of an increase in national output by more than 10% in each of the last two years, has tended to frame its investment plans on the overly optimistic assumption that the recent rate of expansion will continue. All this has produced an excessive expansion of bank credit since the spring of last year and a considerable drain on foreign exchange reserves since the beginning of this year. 4. Both the government and the Bank of Japan realize, however, the importance of preventing a recurrence of inflation which would drive up prices and jeopardize Japan's exports. A series of measures have been taken recently to restrict bank credit and nalt the decline in foreign exchange reserves. These will undoubtedly have a considerable although delayed effect; and there is reason to believe that the government will take supplemental measures should they prove to be necessary. Present indications point to a continuing though gradually declining drain on foreign exchange reserves until the fall of this year when a balance may again be achieved. - ii - 5. Over the next five years the Japanese economy should be able to expand at a rate between 4 and 5% per year. TWhile this would represent a considerable decline from the rate of growth in the last two years, it would still be substantial as measured by the performance of other countries. The principal determinant of economic expansion will be Japan's ability 4 to earn and save foreign exchange. This in turn will determine her ability to import raw materials and fuel to sustain the rise in manufacturing output on which the rate of growth of the entire economy primarily depends. Japan's exports, which increased by almost 100 from 1952 to 1956, will probably not expand by more than 25% over the next five years because about a tnird of her present exports consist of such items as ships iron and steel and cotton manufactures which are unlikely to growT and may even decline somewhat. On invisible account Japan will be able to save foreign exchange by progressively balancing her freight income anrI expenditures3 but, on the other hand., she faces the prospect of a declining volume of U.S. disbursements. All in all, the volume of foreign exchange available for an expansion of imports is unlikely to exceed that required for a L-5% annual increase in national output. 6. Considering the future growth of the economy and. exports, the present and prospective volane of external indebtedness and Japan's excellent debt record, and assuming that serious inflation is avoided, Japan would be justified in borrowing substantial sums over the next year or two in order to relieve tlhie strain resulting from the need to increase essential investments in a number of fields. I.ost of this borrowing could be in dollars.. - iii - THE DEVELOPMENT AND PROSPECTS OF JAPAN'S ECONOMY A. Recent Progress 1. During the last four years the Japanese economy has advanced rapidly on all fronts. Following the last postwar bout with inflation in 1953, the economy went through a disinflationary period of readjustment in 1954 and thereafter developed at an extraordinary pace. The rate of growth during these last two years is probably unique in the world. From 1952 to 1956, as a whole, industrial production went up by almost 75%, national income (in real terms) by around 30%, export trade by nearly 100% and foreign exchange reserves by about 15%. Despite the increase in population and the loss of the country's overseas possessions, the Japanese people are enjoying today a standard of life substantially better than in normal prewar years. 2. The rate at which the economy has been expanding year by year since 1952 is set forth in the following table: Table I ECONTOMIC INICATORS Percentage Percentage Change over Preceding Year Chans 1953 1954 1955 1956 1952<-& Production Industrial production / 22.7 / 7.6 / 8.3 / 21.2 / 73.3 Real National Income 1/ / 4.6 / 3.3 /10.7 / 12.0 2/ / 33.9 Per capita 1/ / 3.0 / 2.4 / 9.1 / 10.9 2/ / 27.5 Investment Gross domestic capital formation 1/ / 18.5 - 11.9 /24.7 / 25.8 2/ / 62.2 Building construction starts (value) / 28.2 , 9.2 - 7.6 / 30.8 / 81.6 Funds raised for indus- trial equipment 3/ / 57.8 - 16.8 -30.5 / 125.2 /105.7 Trade Exports - Values / 0.1 O 27.8 /23.4 / 24.4 7/96.5 - Volurn , 8.2 / 33.3 /30.6 / 19.0 /125.1 Imports - Values / 18.3 - 0.4 / 3.4 / 30.7 /57.2 - Volume /35.9 / 3.6 / 5.1 / 26.8 /88.3 Foreign Exchange Reserves (Net) -20.0 / 0.9 /36.3 / 4.6 / 14.6 Noney Supply & Prices Cash & Deposit Currency 4/ /13.9 / 3.5 / 2.6 /14.7 / 38.7 Wholesale Prices 7/ 0.4 - 0.7 - 1.8 7 4.6 7/ 2.4 Consumer Prices / 7.5 / 5.4 - 1.4 / 1.0 / 12.8 I/ Fiscal year. 2/ Estimate. ]/ Funds raised through bank borrowing and the issue of bonds and stocks. 4/ 1obdian of year-end figures. - 2 - 3. This general expansion has far exceeded the expectations of most foreign observers as wJell as the projections originally made by Japanese economic pundits. The basic reason for this advance is the extraordinary vitality, adaptability and flexibility7 of the Japanese people. Japan has a free enterprise, not a planned, economy. Althoug-h the economy is influenced and to some extent ccntrolled by the Fovernment, and there are close ties between ,sovernment and business, the drive behind the economic advance comes from the thousands of private entrepreneurs - 2a rge, medium and small - who are cuick to see and capitalize on their opportunities. The Japanese people as a whole have traditionally displayed a great capacity to waiork hard and to save. Over the last five years gross investment has ranged between 23 and 29 percent of gross national product. (See Table 1, Statistical Appendtix.) The thriftiness of the Japanese is indicated by the fact fhat as incomes have risen and prices have become stabilized the proportion of personal disposable income saved has increased from 12.4h% in the fiscal year 1953 to 16.85 in the fiscal year 1955 (see Table }, Statistical Appendix); and there is every indication that the proportion was as high or probably hir-her in the last year.* This high rate of savings) comqbined with the maintenance of tonetanr stability since 1953, has enabledthe Japanese to more than double the volume of their exports since 1952 while keeping the rise in imports to a much more modest figure. Factors Responsible for the Progress ). A number of subsidiary factors have also played a role in this economic advance. One of these factors is that Japan has had to devote little of her oun resources to defense. Tatal defense expenditures in the fiscal year 1956, foOr instance, amounted to only 1.5' of estimated gross national product. The Japanese were also able to capitalize during the last four years on the substantial investment in plartrehabilitation and expansion made previously and continuing into 1953. While investnent has been at a high level in recent years, it would probably not have been sufficient by itself to permit the very large increase in output experienced in 1955 and 1956. Thus to scne, although probably not a considerable, extent Japan has lived off capital accumulated prior to l954. There have also been some adventitious favorable factors. One of these has been the sustained economic grow^th over recent years in the world at large w,hich has uncloubtedly assisted the Japanese in finding rmarkets for their exports. The other was the record rice crop in 1955, followted by a better-than-average crop in 1956. Ihe bumper rice crop in 1955, together with the decline in the price of imported rice, probably reduced Japan's foreign exchange outlays by nearly ,100 million in 1956. Gains in Production 5. In manufacturing, Japan has made great strides in the volume, diversity and ouality of its output. In 1956 the production of manufactures was 131l above the average of the prewar years, 1934-36. Te machinery (including ships and other transport eouipment) and chemical industries quadrupled, and nearly *The increase in time and savings deposits of banks, in. postal savings deposits and in assets of the life insurance and postal insurance system amounted to g 691.7 billion in 1956, as compared with Y 443.5 billion in 1955. - 3 - quadrupled, their respective outputs by comparison ilth these prewar year s, thus attaining a far more significant place in the structure of Japanese manufacturing industry. The production of metals tripled. (See Tables 3 and 4, Statistical Appendix.) Japan has to a large extent overcome the lag in technology w,dhich resulted from its isolation during the war and immediate postwjar period. Recent technological adlvances abroad have been imported on a large scale through the acouisition of patents and other arrangements; and the Japanese have further enhanced their reputation for an outstanding ability to adopt the mthods of production and technicaes developed in the West. In the chemical industry production has been considerably diversified through the introduction of petro-chemicals, synthetic resins and fibers and a wide range of pharmaceuticals. In the electro-technical field the electronics industry has been greatly developed. In established branches of industry productivity and efficiency ha-ve apparently increased significantly, although the extent of the improvement is difficult to measure. In ship building, in thich Japan attained the leading place in the world during 1956, costs have been greatly reduced through improved handling of m-terials, the use of welding and the adoption of the block assembly method. The amount of raterials required per unit of output has declined; and production per man-hour has risen substantially, although this may have been primarily due to a fuller utiliza- tion of factory manpower Thich formerly was redundant. Partly under the stimulus imparted by the ICA. mission of the U.S. Covernment, Japanese business- men have become more conscious of the need to raise productivity and improve management practices which in many cases are still well below tne standards of the lWest. 6. In agriculture, where Japan had already achieved high yields thL[61 million in 1955, rose again to p729 million in 1956. A large import surplus has continued during the first part of 1957. (See Table 19, Statistical Appendix for the development of main imports from 1952 to 1956.) Geographical Distribution of Trade 12. Geographiaically Japants export gains over the last four years have been very widely distributed. In terms of e rcentage, the greatest advance since 1S52 has been in exports to Africa 7,Thich have cuadrupled and amounted in 1956 to a little over 15% of Japan's total sales abroad. Exports to the 1Kfddle East have more than tripled, although they still represented only 3.8% of the total in 1956. The largest absolute increase - .I'?309 rmllion - a gain of 132%,o was achieved in exports to the United States which absorbed almost 22% of the total in 1956. Sales to Latin America in 1956 were 286% above those in 1952 and accounted for about 7.5% of the total. Comparatively much less impressive increases were registered in exports to northwest Furope, Oceania and Asia other than the iThddle East. Southeast Asia, including India and Pakistan, is still the single most important market area for Japan, taking 26.5% of her exports in 1956, but it is noteworthy that trade with that area expanded by only 44LI since 1952. Mhe slow rate of economic progress in that area has evidently retarded the further development of Japanese sales. 13. The increase in imports has also been very Eidely distributed. The largest percentage increase w-as in imports from Latin America which rose 289% from 1952 to 1956 and accounted for 12%o of total 1956 imports. The rise in imports from Africa was the second largest with an increase of 137%, although in 1956 they represented only 1.8% of total imports. Imports from the Middle East doubled and accounted for 8% of 1956 imports. The largest absolute increase - 3296 million - a rise of 39', was in imports from the United States which supplied 33% of total imports in 1956. Imports from Southeast Asia increased.66! and accounted for about 21%Z of 1956 imports; this area was the second largest supplier of goods, after the United States. Substantial percentage increases were also registered in imports fron Oceania (89%) and Northwestern Europe (6L%). The one exception to the rising trend was:in purchases from Southern Europe, which declined by 28% between 1952 and 1956; in 1956 these imports represented less than 1%a of the total. (See Table 20, Statistical Appendix.) 14. In trade by currency areas (see 'Tble II), Japan has incurred large deficits with the dollar area each year. Dollar exports, however, have shown steady and substantial increases, and in 1955 the deficit was reduced from more than 800 million to ~ 15 million. In 1956, however, the shlarp increase in imports was greater than the increase in exports ard the dollar deficit rose to 4;630 million. The share of dollar exports in total exports rose from 31% in 1952 to h4% in 1956, w.%Thile the share of dollar imports in total imports dropped from 60% to 53% over the period. Sterling area exports and imports have also risen but have remained in closer balance than in the case of dollar trade. However, the sterling surpluses realized in some years have been more than offset by deficits in other years. The open account trade has resulted in surpluses for Japan in all but one of the past five years. Both exports and imports in open account trade have been declining since 1954, and this trend is likely to continue in the future. Japan has had open account agree- ments with 17 countries during the past five years, the more important of wThich have been Indonesia, Argentina, Brazil, Egypt, Korea, Taiwan, the Philippines and Thailand. A number of these agreements have been terminated in the past year and a half, mainly due to problems encountered in settling outstanding balances, and Japan intends to terminate the remaining ones ihenever this is acceptable to the trading partners concerned. (See Table 21, Statistical Appendix, for the development of open account balances by country.) Table IV MRADE EY CURRFE11CY A-rPEA (in millions of US;) Exports; f.o.b.. Imports, c.i.f. Balance Open Open Open a/c a/c a/c 1952 397.0 539.7 336.2 1,221.7 501.6 30.9 -824.7 $38.1 $31.3 1953 490.1 317.5 467.2 1,301.8 602.8 502.1 -814.7 -285.3 -34.9 1954 560.9 492.8 575.6 1,411.1 433.2 554.9 -850.2 /59.6 /20.7 1955 816.h 649.1 545.0 1,332.0 599.5 539.8 -515.6 /49.6 /5.2 1956 1,095.3 906.5 498.9 1,725.2 1,057.5 447.0 -629.9 -151.0 /51.9 - 8- Overall Balance of Payments 15. Besides the deficits on trade account, Japan has had sizeable deficits on normal invisibles, the largest item being transportation. (See Table V.) Thble V BALINCE OF PYI]ENTIS SUH1L5.RY (in millions of US t) 1952 1953 1954 1955 1956 A. Current Transactions Exports, f.o.b. 1,289 1,258 1,611 2,006 2,458 Imports, f.o.b. 1,701 2,050 2,00 2,061 2,602 Merchandise balance - 413 - 792 -T429 - 144 Transport and insurance - 162 - 183 - 177 - 157 - 308 Foreign military expenditures f 788 f 803 f 602 f 505 $ g93 Reparations - - - - - 18 Other invisibles / 11 - 33 _ - hS - 72 Total, Current Transactions f 225 - 205 - 51 A 226 -8 B. Private Capital 37 - 18 f4 85 2 C. Official and Boanking Capital (excluding gold and foreign exchange holdings) Short-term credits 4 L0 f 2 A 98 A 52 1 4L0 Other -87 /51 f39 - 9 /65 Total _47 /53 f137 AL3 /205 D. Errors and Omissions X1 /2 f13 -15 f21 E. Total A through D A 215 - 168 r 113 / 339 / 176 F. Change in Gross Gold & Foreign Exchange Holdings A 215 - 168 / 113 f 339 / 176 Net payments on transportation declined from 1953 to 1955 but in 1956, with the large increase in both exports and imports, they rose diarply. Moreover, current account payments have been increased by reparations since 1955. These deficits, however, have been nore than offset since 1953 by receipts from foreign military expenditures and some import of capital. By far the most important iten has been foreign military expenditures, which is virtually all in dollars and consists of both procurement of military goods and services in Japan and expenditures of foreign military personnel stationed in Japan. While the total of such expenditures has declined from around >800 million in 1952 and. 1953 to '493 million in 1956, the volume has been much better sustained than was expected some years ago. At the same time, it should be - 9 - noted that, in view of the giw7oth in Japan's total foreign exchange earnings, receipts from this source have fallen from 35% of total current account receipts in 1952 to less than 15% in 1956. 16. The major capital receipts have been short-term credits, consisting mainly of 90 to 120-day "usance"T credits obtained by Japanese private banks from correspondent banks in the U.S. and U.K., and of one year cotton credits obtained from the U.S. Export-Import Bank. Between 1953 and 1956 these credits rose by &,290 million. Moreover in 1953, Txhen Japan was running a heavy deficit with trhe sterling area, Japan purchased from the IMF l12. million eouivalent of sterling with yen and repurchased Z61.6 million of yen writh dollars. The remaining St62.4 million of yen was repurchased .sith dollars in 1955. In addition Japan has received smaller amounts in long-term loans from the IBRD and ICA. (See Tables 22 to 26, Statistical Appendix, for more detailed statements of the balance of payments.) 17. An adeouate series showing the balance of payments by currency areas is not available. However, the general trends can be seen from a series showing foreicn exchange receipts and payments, compiled by the Foreign Exchange Control Department of the Bank of Japan. The coverage and timing of transactions included in this series are somewhat different from the balance of payments. The figures purport to show actual receipts and disbursements of foreign exchange, but apparently do not include all trans- actions and do not therefore tally exactly with the movement in foreign exchange reserves. In Table VI foreign exchange receipts and payments by currency of settlement are shown for the years 1952 to 1956. It will be seen that the distribution of receipts as between dollar and non-dollar currencies remained relatively stable over the period. Dollar receipts accounted for approximately 57% of the total in both 1952 and 1956. On the payments side, there was a significant drop in the share of dollars fromn 58% in 1952 to 1490 in 1956. 18. Betw^een 1953 and 1956 Japan maraged to add a little to her net gold and foreign exchange reserves each year, although this trend was reversed in the first quarter of 1957 (see Table 27, Statistical Appendix). At the end of 1956 they amounted to $1,313 million, or the equivalent of about LO% of Japan's imports that year. Of this sum, however, 0281 million represented in essence "frozen" surpluses with Indonesia, Korea and Argentina, leaving a net "liauid" balance of 4bl,032 million or 32% of 1956 imports. The proportion of dollars in the total reserves was the same - 77% - at the end of 1953 and at the end of 1956, indicating that Japan was able to offset the decline in U.S. military expenditures wnith additional net export earnings. - 10 - Table VI FOREI(CJ EXChANGE RE;EIP75 PMH) P?_YENTS BY C¶RUENCY OF SETTI'LEIFT (in millions of US ,) 1952 1953 1954 1955 1956 Receipts U.S. 4J 1,296 1,370 1,198 1,405 1,850 Sterling 614o 369 5b6 763 954 Open a/c 304 380 566 488 392 Other - - - 11 28 Total 2,239 2,120 3,225 Payments U.S. . 1,108 1,161 1,290 1,051 1,426 Sterling 580 674 421 642 1,0140 Open a/c 237 479 498 473 415 Other - - - 7 50 Total 1,925 2,314 2,209 2,174 2,931 Balance U. S. ' 188 f209 - 92 /354 f421 Sterling / 60 - 305 f 125 / 121 - 86 Open a/c / 67 - 99 f 68 , 15 - 23 Other - - - f 4 - 22 Tbtal A 314 - 194 f1oo 49h S2294 PI0VEMEvNT I Y GROSS FOREIC1 E XCP HNCE RESERVES Gold -12 f 2 f 3 / 2 - Dollar /174 /28 -125 /226 /300 Sterling / 51 - 146 / 112 / 60 - 147 Open a/c 2 53 123 /53 / 22 Total ;21 416 113 f339 /176 Financial Stability 19. As already indicated, the favorable developments in Japan's trade and balance of payments were greatly facilitated and, in fact, made possible by the financial stability maintained in the country since 1953. To stop the inflationary investment boom manifest in that year, the Government not only initiated credit restrictions through the Bank of Japan, but also cut its own budget in 19514, reducing public Lnvestment and the availability of various government-controlled funds for financing private investment. The disinflation proved painful at first, but laid the groundwork for the subsenuent advance in the economy. As production and trade revived, exports expanded and the decline in foreign exchange reserves was reversed. Moreover, while the government kept its Feneral budget approximately balanced at a level of around one trillion yen (see Table 8, Statistical Appendix) the many transactions channelled through special accounts, including the purchase and sale of cereals and foreign exchange, brought about excess Treasury payments to the public of Y 190.2 billion and X 276.6 billion in the fiscal years 1954 and 1955, as compared with a surplus of receipts of X 94.9 billion in 1953. - 11 - Part of these deficits was caused by growing balance of payments surpluses, leading to net purchases of exchange by the Governmentts foreign exchange fund, but even after excluding such foreign exchange transactions, the Treasury's ercess payments to the public rose from Y 3!.9 billion in 1953 to 4 116.1 billion in 195L and 4 106.7 billion in 1095 (See Table 10, Statistical Appendix). As a result of these developments, business and the economy generally became more liouid; total bank deposits increased more rapidly than loans and discounts, and the banks were able to reduce their borrowing from the Bark of Japan to record loij levels by the first nuarter of 1956. During the fiscal year 1956, however, buoyant budget revenues to-ether w,Tith a reduction in the deficit of the Food Account brought about a rTreasury sarplus of X 100.1 billion (exclusive of foreign exchange transactions); and this in turn wITas a factor in producing a rather rapid expansion in bank credit during the latter part of the year. (See Table 7, Statistical Appendix). 20. As inclicated in Table I earller in this report, the increase in money supply over the last four years has Teen roughly parallel to the rise in real national income. Basically the Treasury deficits during 1954 and 1955 obviated a further expansion of bank credit which would otherw,ise have been necessary to sustain the rising volume of production and trade. Wholesale prices on the whole remained stable over the past four years, even dropping somewhat in 1954 and 1955. Consumer prices rose durine 1953 and 1954, largely as the result of the delayed impact of an earlier rise in wholesale prices, and then rema ned relatively stable until the end of 1956 (See Table 11, Statistical Appendix). In the latter part of 1956, there was an up-ard pressure on prices and a tendency toward excess money creation as the result of the in-v.estment boonm which wf!as developing. Improvement in Corporate Finances 21. It is notewNzorthy that the general improvement in the economTy has also had some favorable effects on corporate finances. In the last feiwr years companies have earned substantially greater profits, a large part of which were reinvested. Thus industry's reliance on bank credit for financinpg was notably diminished during 1954 and 1955. (See Table 12, Statistical Appendix.) In 1956, however, sharply rising investment reouirements again forced industry to resort extensively to the banks for new financing despite high earnings and a record amount of capital raised in the market. Yet by comparison with 1953 most branches of industry have in recent years financed a larger proportion of their nei,iT eouipment out of depreciation, retained savingcs and new capital. (See Table 13, Statistical Appendix.) All this has effected a sloT but perceptible improvement in the various "financial ratios" of corporations - e.g., current ratio, debt equity ratio, etc. - although in the first half of 1956 there was a tendency toward reversal of thnis improvement as companies experienced a substantial increase in requirements for working and irvestment capital in order to sustain the sharp increase in output. (See Table 15, Statistical Appendix.) 22. Further improvement in corporate finances is unfortunately still retarded by certain interest and tax policies of the Government. The Govern- ment, for instance, has not permitted a sufficiently high interest rate on debentures to permit the development of an active market in such securities. - 12 - More important, the tax system places a premrium on meeting investment reouire- ments by borrowing, primarily from banks, rather than an increase in capital. In large part, for instance, individual income from interest is either exempt from taxation or lightly taxed at the source and does not, within certain limits, have to be added to global income for purposes of computing income tax liability, whereas dividend payments are subject first to tne 40o0 corporate income tax and are then tayed again as part of the income of the individual recipient who must include dividends in his total income. In the last three years the government did stimulate share flotations by certain tax concessions T,-hich permitted companies issuing ne-w stock to charge dividends on such n capital up to 10% during the following two-year period as expenses in computing their corporate tax liability. This concession, however, expired at the end of January 1057. B. Current Situation and Prospects Signs of Strain 23. IThile the economy has developed very favorably since 1953, some stresses and strains have become evident recently and it is probable that the rate of progress will slov- up considerably in the years ahead. The balance of international payments has tuirned adverse and is likely to remain so fo.r sometime. During the first cuarter of 1957 foreign exchange reserves (net of liabilities of one year or less) fell by t290 million to a level of -.1,023 million. (See Table 27, Statistical Appendix.) Provisional data point to a further decline of r8a million in April ancd another substantial drop in May. In June, in order to cushion the drain on reserves, Japan drew '125 million (50' of her auota) from the IIF and obtained t115 million in :Eiort-term (9-months) credits from the U.S. Export-Import Bank for the purchase of U.S. agricultural products. Imports have been increasingf very rapidly since the first cuarter of 1956; and during most of this period the percentage by which exports have exceeeded those of the corresponding period of the preceding year has been cleclining. Thble VII FOREIGN TRADE BY QUAPERS, 1956-57 (in billions of yen) Imports Exports Quarterly Percent Chan:e Percent Change Period Total over Year Ago Total over Year Ago Balance 1956 - I 24.92 f 19.9 20.14 A 23.0 - 4.78 - II 29.06 f 25.3 21.64 f 30.8 - 7.42 - III 29.69 f 39.5 22.28 A 20.8 - 7.141 - IV 3 2.59 f 11.2 25. 98 t 18.5 - 6.61 1957 - I 38.35 53.9 23.614 A 17.14 - 1.71 - 13 - 24. It has already been pointed out that the sharp r se in importshas been, in part, occasioned by the need to replenish depleted inventories.* The rising trend of imports would not in itself be a cause for alarm if it were not for the fact that the demand for imports has also been caused by a rapidly mushrooming investtment boom wThich could get out of hand and lead to a prolonged drain on the balance of Dayments by stimulating imports and reducing the incentive to export. The extent of the investment demand may be gauged by the fact that domestic orders for capital equipment placed with Japanese industry rose from Z 225.3 billion in 1955 to Y 501.2 billion in 1956. Mioreover, in the second half of 1956 orders Tere almost twice as high as in the first half; and at the end of 195c the total backlog of all orders stood at ;r 617.9 billion as compared with Y. 286.7 billion at the end of 1955. (See Table 16, Statistical Appendix.) Building, already at a high level in 1955, further increased -n 1956, the value of new construction starts in that year attaining a level 30.8% higher than that of the previous year. From December 1955 to Harch 1957 the wholesale price indexes of capital goods and building materials rose by about 23%. 25. Rising imports and imvestment have greatly increased the demand for funds, producing a sharp increase in bank lending and renewed raccurse to the Bank of Japan. In the fiscal year ended Mlarch 1957 loans and discounts of all banks rose by 1,043 billion as compared with Y 332 billion in the preceding year. Bank borrowzings fron the central bank, -vhich amounted to only Y 27.3 billion at t1e end of March 1956, have more or less steadily risen ever since, reaching Y 276.3 billion at the end of March 1957. To a certain extent, however, the importance of this increase should be discounted, since large government surpluses have recently contributed to the tightness of money. During the fiscal year ended March 1957 the Treasury ran a surplus of v 100.1 billion (exclusive of foreign exchange transactions) whereas in the preceding year it had excess payments of Y 106.7 billion. 26. It became apparent in the spring of 1957 that total demand and particularly investment demand would have to be severely curbed. The first step in tuhis direction wvas hesitant and contradictory. On March 19 the Bank of Japan raised its interest ratesby 0.365%, but at the sa.Me time tnis measure was virtually offset by a raising of the ceiling on the amounts of credit which commercial banks could obtain mithout becoming llable to a higher or penalty rate. More drastic measures were taken subsequently. On May 8 the Bank increased its loan and discount rates, except those applicable to export bills, by 0.73% to a level ranging betwyeen 8.h4, and 9.49%; and the maximum rates 'which commercial banks were permitted to charge were raised on May 13. Idditional steps were taken to tighten import credit. The authorization to utilize sterling lines of import credits which had previously extended to virtually all sterling imports was severely curtailed on IMay 13; and the period for which tlhese credits coulc be used was cut from 120 days to 90 dqys. This measure forced Japanese importers to use more expensivre domestic Japanese credits. Early in June the overmnent sharply increased the amount of deposit which Japanese importers are recuired to make when receiving permits for 11 *Th-e ratio of the index of stockpiles of a number of important imported raw materials to the index of consumption of such materials reached a low of 73.7 (1953 averac-e = 100) in February 1956, recovered to 90.7 in January 1957 and stood at 86.7 in February 1957. - ih - imports except a limited range of essential ra-w materials and fuel. The deposit recuirement was raised from a range of 1-5' of the value of the import to a range of 10-3,%; and iti was stipulated that this deposit should henceforth be made in the Bank of Japan instead of in the commercial banks, thus adding to the tightness of money. 27. Strict curbs on the suiply of bank credit appear to be all the more necessary because it 4s unlikely that Treasury transactions with the public during the current fiscal year will show a significant surplus as in the last year. The budget for the current year which started on April 1, 1957, shows a .4- rise in expenditures, but if, as is usually the case, a supplementary budget is adopted, this increase w,ill be larger. 0w ing to the marked buoyancy of tax revenues, the Government decided to cut income taxes by Y 100 billion, offsetting this reduction, however, by an increase in other taxes to the extent of Y 32 billion. Because tax collections may well prove to be under- estimated, the final accounts will probably approximate a balance. ITevertheless the final outcome is unlikely to be as favorable as in the fiscal year 1956 when budget revenues greatly exceeded expectations. 28. In view of the inevitably delayed effect of the various measures taken to restrict credit and investment, the present drain on Japan's foreign exchange reserves may well continue, although at a d1minishing rate, until the fall of the year. WThether these m. easures Till prove to be wholly adeouate so right the imbalance in international payments remains to be seen. HowTever, the hMinistry of Finance and the Bank of Japan are on the whole strongholds of financial conservatism and are both fully cognizant of the need to prevent a recurrence of inflation wheich woould price Japanese exports out of the market. The city banks are also cautious and conservative in their outlook, althou-h their basic concern to keep credit expansion under control is some-Ohat affected by the keen competition among them in accommodating business. Taking these factors into consideration as well as the past record (e.g. the effective action to stop the 1953 inflation) there is reason to believe that additional measures will be taken if necessary to halt the present drain on foreign exchange reserves. Investment Recuirements 29. In the absence of additional foreign borrowing some drain on the country's foreign exchange reserves has probably been inevitable. An expansion of investment has been and is undoubtedly necessary; the problem is to keep it within reasonable bounJs. As indicated earlier in this report, the rise in production in recent vearshas tended to outpace the increase in investment. Oertain bottlenecks have appeared which must be eliminated to permit further gro-vwth of the econorrj. Moreover, additional modernization of industrial plant and equipment is essential if Japan is to expand th-e area in wlich it is competitive in world markets. A,mong the principal bottlenecks which have emerged are steel, po-wer and transport. Steel has been in such short supply that a considerable increase in imports has taken place wqhile exports have fallen off sharply. The present annual production - about 12 million tons in terms of ingots - must be raised; and, in view of the -orld-vide shortage of scrap, this erntails a disoroportionately large expansion in blast furnace and converter capacity. Electric power facilities are being: fiilly utilized; and - 15 - during the last winter the shortage of power, aggravated by low-water conditions, necessitated some reduction in industrial output, particularly in heavy power-consuming industries. Here too, substantially higher investment wrill be reouired in tne next five years. The railways havTe found it increasingly difficult to cope with the growing volume of traffic, resulting in lengthofiing delays in moving the cargo offered. The Japan National Railways, a public corporation, has performed admirably in making the most of its equipment, but has been handicapped in financing required new investment during the postwar period by the excessively low level of rates and fares. A five-year investment program has now been adopted which will raise the annual investment to a total almost twJice that in recent years. Additional investment in Japants road system, -wThich is quite sub-standard considering the development of the economy as a whole, also appears to be necessary. 30. Yet, many of the investment plans seem to be based on excessively sanguine expectations and would, if carried out, place too severe a strain on Japan's resources. Buoyed up by the experience of the last few ears, many branches of industry appear to be basing their investment plans on the assumption that the rather extraordinary rate of expansion in t'he immediate past wvill continue into the future. Even the government-approved investment programs for the basic industries of power and steel are based on the expecta- tion that national income will grow at a rate of 7% per year, with correspond- ingly higrher rates of growth for manufacturing output. Prospects of Growth 31. It is therefore important to arrive at a reasonable approximation of the rate of economic growth whrich Japan can sustain over the next five years. The Bank MIission reached the conclusion that the rate of increase in national income during this period is unlikely, on the average, to exceed five percent and may wJell range between L and 5 percent. In individual years, and partic- ularly in the current year, it may wiell be higher. While this would still be a very creditable rate of expansion anrd would afford a considerable rise in the standard of living, considerin- the fact that the population is increasing at only about 1% per annur-, it does imply a considerable reduction from the high rates in the last few years. 32. In Japan econonic growth is dependent, above all, on further expansion of manufacturing. ilining output makes only a very small contribution to national income and is not likely to grow~ rapidly. The income from agriculture, forestry and fishing, w-hich represents almost 20Z of total national income, will probably not increa.se much more rapidly than thre population. There is reason to believe, as was indicated by the Bank's agricultural mission to Japan in 195L, that agricultural output can still increase sufficiently over the next five to ten years to keep imports of foodstuffs on the averaEe at the level which obtained in recent years. Additional land reclamation, a further extension of double cropping and some continued improvement in agricultural methods should make this possible. 33. After taking into account the probable expansion of the extractive (primary) industries, it is estimated that manufacturing output will need to grow at an annual average rate of 8 to 95 if total national income is - 16 - to rise at a rate betlreen 1 and 5%. The possibility of sustaining such a growth will depend, above all, on Japan's capacity to pa-y for the necessary volume of imports of fuel and raw materials; and this in turn will depend on her ability to expand exports and on the development of some of the critical "invisible" items in Japan's balance of payments, particularly of the volume of expenditures by U.S. forcesin Japan and of the balance of receipts and payments on freight account. 3L. A projection of export earnings isalways hazardous. On the one hand, there is the danger of repeating the past mistake of underestimating the prospective performance of the Japanese on the vorld rmarket. On the other hand, the available evidence inClicates that the expansion of exports is likely to slacken considerably, in terms of both the percentage increase and the absolute amounts. Exports of cotton fabrics, ships and steel, which were the three largest items and together accounted for 300 of the value of total exports in 1956, are likely to remain either stable or decline some/hat in five years. The sale of cotton fabrics, already very high, has slready encountered restrictions in the United States and will probably be limited by the protected development of cotton textile industries in some countries. Exports of ships may well be higher in the current year and the next few;J years, but if the world ship building boom tapers off they may drop after b or 5 years. In steel, Japan il1l continue to be a relatively high cost producer. Mvjoreover, i t should be anticipated that the ti½ht iworld supply situation which has prevailed in recent years will not continue indefinitely. Thus Then the world supply situation eases, Japan is likely to encounter increasing difficulty in exporting. On balance, it seems a reasonable expectation that five years hence exports of cotton fabrics and ships may approximate recent levels, while exports of steel may be considerably lower. Exports of other capital goods which contributed 8.8% of exports in 1956, should continue to expand steadily, but the progress is inlikely to be spectacular because, for many of these items, Japan must still recduce costs and establish a reputation for cuality and reliability. Prospects are reasonably good for railway rolling stock, cotton textile machinery and lirht electrical machinery and appliances such as small generating sets, electric fans, radios, tubesand light bulbs, where Japan has already established a good competitive position. On the otner hand, the clevelopment of exports of such items as heavy power generating ecuipment, agricultural, mining and construction eauipment is likely to proceed more slowTly. The xemaining exports, w-hich include a large and well diversified number of items, should continue to increase rapidly as they have in the past. Among the many items ihere further sizeable gains may be expected are synthetic fabrics, chemical fertilizers, pharmaceuticals, plastics, chinaware, rubber manufactures, textile specialities, cement, optical instruments, carmeras and toys. 35. Japan has demonstrated its capacity to export an ever wiidening range of articles, and given the ingenuity, perseverance and skill of the Japanese, this trend may be expected to continue. MIoreover, foreign observers generally agree that, despite the progress made in the past, there is still ample opportunity for reduction of costs and improvement in cuality ihich, when fully exploited, will further enhance the competitive position of Japanese industr-y in the foreign market. Altoa-ether Japan should be able to raise its exports over the next five years from n;2,500 million to around 13,00 million. This increase of about k4600 million, or say 25%, compares with an expanE on of vil,273 million or 96% from 1952 to 1956. - 17 - 36. Hajor changes in the geographical and currency distribution of Japan's foreign trade are not expected. Essentially continuation of past trends could be expected. In trade with the dollar area, Japan over the long run should be able to increase her exports somewhat faster than imports, with a consecuent gradual reduction in the trade deficit. Import of steel scrap, in particular, may be expected to level off and perhaps decline somewhat from recent levels. In non-dollar trade, there will be a continued decline in -brade under open account agreements and a rise in trade on cash basis, mostly in sterling. It is difficult to forecast the future development of trale with mainland China. There may be some increase above 1956 levels, wThen this trade accounted for sliohtly lessthan l of Japan's export and imports, but Cnina is not likely to be dependable as a source of supply of imports or as a market for Japanese exports. Recent attempts to expandthis trade (for example, through the importation of Chinese coal) have proved difficult, and the results have been generally unsatisfactory from UJapan's point of view. Thus it is doubtful that mainland China will account for a substantial portion of Japan's foreign trade in the foreseeable future. 37. IThen the prospective development of the invisibles on current inter- national account is considered, it seems not unl'kely that the further prowth of the merchant marine will enable Japan to wipe out in five years' time the present deficit of nearly 4A70 million on freight. A. projection of U.S. forces' expenditures is extremely difficult, since the future policies of both Japan and the U.S. regarding the defense of Japan cannot be predicted. However, it seems probable that the U.S. will rnaintain considerable forces in Japan for some time to come. IMorever there will most likely continue to be a substantial amount of procurement to meet the recuirements of U.S. forces in Okinawa and Korea. At the same time it would be excessively optimistic (from Japan's standpoint) to expect that the level of expenditures will remain at the yresent total of about f`500 million. It has therefore been assumed rather arbitrarily, that these expenditures may decline over the next five years to a figure ranging between 'U00 and ')250 million. Taking into consideration other possible changes on invisible account, it is estimated that the whole invisible account may either deteriorate by around `75 million or improve by d?75 million, depending on the range of U.S. forces' expenditures. Ihis estimate, combined with the projection of export earnings, would indicate that Japan would have the resources, in five years' time, to finance an increase in imports of between 1525 and 1S675 million. Since th,e 1956 value of imports on an f.o.b. basis (previous figures cited were on a c.i.f. basis) amounted to d)2,600 million, imports by 1961 could rise to between 33,125 and fi3,275 million (20-265). 38. This projected increase in imports should' be able to sustain an approximately s milar rise in gross national product. W^hile the degree of dependence of the manufacturing industries, par ticularly the metal industries, on imported raw materials will inerease substantially and imports of petroleum and petroleum products will probably at least double over the next five years, the proportion of total imports to national output is unlikely to rise significantly over this period. Food imports, which accounted for about 20i of imports during the last two years, may wTell remain at approximately the present level. Similarly, imports of chemicals, machinery and equipment i a s~5 - 18 - and other manufactures (except metals), which comprised around 125 of Japan's imports in 1956, will probably not increase substantially, partly because they already rose to a very high level in 1956 and partly because the further development and technical improvement of Japanese manufacturing is likely to make some imports of capital equipment unnecessary. 39. Japan's total external indebtedness at the beginning of 1957 amounted to the eouivalent of Ql1,309 million, of which `,519.6 million was payable in foreign exchange and the remainder in goods and yen. Of the debt payable in foreign exchange, '185 million is scheddled to be repaid over the next five years (see Table 28, Statistical Appendix). The current clebt service burden is fairly modest, amounting in 1956 to about 2.35 of total gross foreign exchange earnings (3.L4 of export earnings). Mlany countries have demonstrated their capacity to carry a considerably larger debt service in relation to their foreign exchange earnings. Ho,ever, Japan should be somewhat more cautious than many other countries in limiting the size of her debt service obligations because: (1) most of her exports are of a type which are vulnerable to restrictions adopted by other countries either to protect their markets from competition or to overcome balance of payments difficulties and (2) almost 90% of her imports consist of foodstuffs, raw materials and fuel the require- ments for which are likely to prove quite inflexible. There is also the contingency that Japan will settle her reparation obligations r,aith Indonesia and Vietnam and make a settlement of her GARITOA debt (for postwrar supplies) with the U.S. After allo-wing for these factors Japan could still prudently contract a sizeable volume of new debt to help relieve the strain which additional essential investment in certain basic facilities and industries is likely to impose on Japan's resources over the next few years. 40. This judgment, of course, assumes that serious inflation will be avoided. In view of the periodic recurrence of inflation during the post^j-ar period and the current strain on Japants resources, this danger cannot altogether be discounted. As previously pointed out, however, the ii-Inistry of Finance and the Bark of Japan are both intent upon preventing inflation. They have so far resisted pressures to ease siEnificantly the tightness of money resulting from the increased demand for investment funds and the growing import surplus; anc. the measures they have taken to check the expansion of bank credit are an earnest of their intention to insist on financial stability. 41. With the above provisos concerning the total debt burden and the avoidance of inflation, Japan could reasonably contract most of any new external indebtedness in dollars. Japan's trade and balance of payments position w7ith the dollar area has strengthened appreciably in the past few years. Dollar export earnings have risen from 31% of total export earnings in 1952 to 41.% in 1956, while dollar imports have declined from 60% of total imports to 53%. On an overall receipts and payments basis, the proportion of dollar receipts has reriained approximately stable at about 575, while the proportion of dollar payments has cdeclined from 5H, in 1952 to 49% in 1956. It may be reasonably assumed that a further gradual improvement in the dollar position will take place in the years ahead, although it is likely to take a considerable length of time before Japan w;,ould be able, without severe import - 19 - restrictions, to balance her dollar income an,, payments exclusive of the receipts from U.S. military expenditures. In view or the currency distribution of Japan's balance or payments, and particularly the uncertainty with respect to U.S. military expenditures, it would be desirable for Japan to obtain at least a part of future foreign loans in non-dollar currencies. - 20 - STATISTICAL APPEIDI TABLE Table 1 NATIONAL ACCOUNTS DATA BY FISCAL YEAR (in billions of yen) 1951 1952 1953 195 1955 1956_6" NATIONAL INCOISE BY DISTRIBUTIVE SHARES At current prices 4,535.3 5,195.4 5,822.4 6,123.5 6,794.8 7,610.0 At constant price (index 1951 = 100) 100 111.6 116.8 120.6 133.5 149.5 At constant price per capita 100 110.4 113.7 116.4 127.0 140.8 (index 1951 = 100) PERSONAL DISPOSABIE INCOM (current prices) 3,731.6 4,473.8 4,962.6 5,426.2 6,047.7 n.a. Percentage saved 18.2 17.7 12.4 13.3 16.8 n.a GRCSS NATIONAL PRODUCT (current prices) 5,471.1 6,109.4 7,075.7 7,424.2 8,188.9 9,151.0 Gross domestic investment 1,682.1 1,658.3 1,965.8 1,732.4 2,150.7 2,690.0 Percent of GNP 30.7 27.1 27.8 23.3 26.2 29.4 Gross public investment 424.2 471.3 622.5 561.2 737.0 695.0 Gross private investment 1,257.9 1,187.0 1,343.3 1,171.2 1,413.7 1,995.0 Personal residential construction 56.2 75.9 102.6 99.6 119.3 n.a. Producers, durable equipment 617.3 726.3 827.2 797.8 843.4 n.a* Changes in business inventories 584.4 384.8 413.5 273.8 451.0 n.a. Consumption expenditures 3,579.6 4,371.6 5,122.4 5,561.6 5,896.9 6,447.0 Private 3,058.6 3,690.0 4,354.5 4,715.8 5,039.6 5,513.0 Government 521.0 681.6 767.9 845.8 857.3 934.0 Surplus on current international account 209.4 79.5 - 12.5 130.2 141.3 14.0 Net domestic investment 1,384.4 1,283.3 1,497.1 1,179.4 1,513.6 1,999.0 Percent of national income 30.5 24.7 25.7 19.3 22.3 26.3 I/ Estimate Source: Economlc Planning Board TABLE 2 SAVINGS INDICATORS: INCREASE IN DEPOSITS ANTD SAVINGS (in billions of yen) riscal Bank Mutual Money Postal Post-Office Welfare Life & Other Invest- Total Year Depositsl/ Loans in Savings Life Insuraneq Insurance 3/ Nlon-Life Financial ment Increase and Trust & Annuities 2/ Insurance Institu- in Including Excluding Saving1/ Companies 4/ tions 1/ Secur- Investment in Banks- ___ _ ities -/ Securities 1951 391.4 36.5 33.5 46.2 21.0 16.4 24.5 66.4 67.6 703.5 635.9 1952 450.7 46.2 68.1 65.9 27.2 17.2 30.5 87.8 107.2 900.7 893.5 1953 319.2 72.2 57.5 83.3 37.9 16.8 40.5 101.6 154.4 888.3 733.9 1954 344.0 31.7 47.0 100.1 48.7 27.4 46.9 59.5 121.5 826.6 705.1 1955 517.5 35.2 95.1 83.1 58.4 31.5 62.9 99.1 85.7 1,068.4 982.7 Source: Bank of Japan. While overlapping among constituent items has been eliminated as f?'r as possible, there is some duplication, particularly between the increase in investment in securities and some of the other items. ,1/ Total deposits less current deposits, government deposits, deposits with other financial institutions and. loans or, deposits. 2/ Investments. .3/ Deposits with Trust Fund Bureau 4| Total funds employed excluding deposits with other financial institutions. .. Total increase in government bonds, corporate debentures and stocks less changes in holdings of government and firancial institutions and loans on securities from financial institutions. Table 3 INDEXES OF INDUSTRIAL PRODUCTION (1934-36 average = 100) Year Industrial Manufacturing Production 7av.) Froduction Total Durables Non-durables Total 1btals Yachinery Total Chemicals Textiles 1952 126.4 128.2 171.8 154.2 205.1 104.5 168.5 66.2 1953 155.1 159.7 209.9 l83.5 266.5 131.8 216.6 76.5 1954 166.9 173.S 213.2 192.3 257.4 150.3 267.2 81.9 L955 180.7 l19.4 226.6 218.9 249.9 168.0 317.4 85.9 L956 219.7 231.3 303.1 265.9 396.9 191.4 367.9 100.0 Iar.1956 200.1 212.8 266.3 255.6 312.7 181.6 357.2 90.0 Aar.1957 240.0 254.8 335.8 315.8 413.6 209.8 421.1 105.2 3Iource: Economic Planning Board T e4 OUTPUT 0 SOME PRINCIPAL PRODUCTS iP-i Steel Steel 2 See. A nmonium o Cotton on P!ower IronR lago-ts Ordinary Generators Vessels Cement Sul t D auf A i 'abrice Yar- (mil. DW) (1000 NT) (1000 MT) (1000 MT) oIlSed (1000 KVA) S (1000 MT) MT 1000 MT) m=.T.) l'bies (MI. (1000 MT) 100 O,W sq.yde.) Wq.ydo> 1951 41,434 43,312 3.127 6,502 4,807 606.6 576.8X/ 6.548 1,593.7 227.7 14,117 2,179.4 487,4 1952 44,010 43,359 3,474 6,988 4,874 889-3 644.71' 7,118 1,860.1 202.4 13,935 2,238,8 497.2 1953 47,296 46,531 4,518 7,662 5,419 1,583.4 558.7 8,768 1,935.4 277.0 19,317 2,810'6 575.4 1954 50,116 42,718: 4,608 7,750 5,593 1,570.6 464.6 10,675 2,074.7 308,8 17,514 3,183,6 659.6 1955 53,504 42,423 5,217 9,408 6,932 1,620.5 1,072.1 10,557 2,128.9 330.4 20;305 3,018.1 773.8 1956 61,434 46,555 5,987 11,106 8,186 930.7 1,981.0 13,024 2,322.6 379.4 22,341 3,479,.6 92047 i/ Fiscal year Source: Bank of Japan Table 5 AGRICTJLTURAL PRODUCTION: MAJOR CROS (in million kokus; I koku 5.01 bushels-/) Rice Naked Sweet White / Soyar DSoya 2e Silkd Year (Brown) Wheat Barley Barley Potatoes Potatoes Beans Beans Tea Cocoons 1952 66.15 9.43 11.23 6.91 1.65 670.62 11.64 4.04 15.24 27.55 1953 54.92 8.43 10.03 6$35 1.44 644.04 12.31 3.33 15.o6 24.82 1954 60.76 9.30 11.07 8.46 1.39 731.56 11.66 2.91 18.09 26.75 1955 79.03 9.01 10.72 8.06 1.91 775.45 11.77 3.93 19.42 30.50 1956 69.76 10.05 10.41 8.71 1.89 720.84 10.41 3.53 15.77 28.84 1/ One koku of rice = 146.2 kg.; of wheat, 136.9 kg.; of barley, 108.8 kg. 2/ In millions of kan (One kan- 3.75 kg.) ESTIATED LIVESTOCK PRODUCTION (metric tons) YEAT MILK Beef Veal Horse Pork 1952 71,121 1,690 15,653 78,443 3,116 1953 80,124 2,188 22,777 93,214 3,796 1954 84,204 3,184 23,986 73,727 4,952 1955 130,184 8,405 20,855 82,302 5,333 1956 135,836 9,619 24,778 103,502 6,152 FISH AM WHAIE CATCH FISH AND OTHER AQUATIC PRODUCTS (in million Kan) Whale Number Whale Oil Year Fish Shell-fish Seaweed Other Caught Output (M.T.) 1951 682.8 38.4 47.5 166.4 7,425 50,072 1952 880.3 59.8 89.6 211.8 6,540 43,506 1953 877.7 84.6 81.1 162.9 8,204 53,746 1954 876.6 83.2 84.6 167.3 11,329 85,910 1955 959.9 88.8 89.3 171.9 12,372 94,781 Source: Mi"nistry of Agriculture, Forestry and Fisheries Table 6 TABOR FORCE AND EMPLOYMENT (in thousana'3) Employed Population Fisheries, 14 yrs. Forestry, Con- Manu- End of old Labor Agri- struc- factur- Period & over Force Une o Total culture .nlg tion Other 1952 57,570 39,380 470 38,900 16,370 590 1,670 7,180 13,090 1953 58,800 39,110 310 38,800 16,130 573 1,900 7,090 13,120 1954 59,640 39,230 600 38,640 15,030 710 1,610 7,180 14,100 1955 61,350 41,410 570 40,840 15,620 520 2,070 7n89 14,730 1956 63,210 42,330 560 41,770 15,090 630 1,980 7,820 16,2704 *Of the total increase in this category since the end of 1952, transportation, communications and other public utilities accounted for 7%; government for 4.1%; trade, finance and services for 87.1%; and r:iscellaneous for 1.9%. Source: Prime Nirnisterts Office. Figures are based on stratified sampling. Table 7 FLUCTUATIONS IN BANK CREDIT AND TrhEASURY TASMACTIOS (in billions of yen) Treasury Surpluses (/) or Deficits (-) in Transactiorns with the PDiblic Change in Change in Excluding Including Fiscal Bank Loans Bank of Japan Foreign Exchange Foreign Exchange Year & Discounts loans & Discournts Fund Fund 1953 / 434.7 / 98.0 -34.9 / 94.9 1954 / 230.6 - 213.2 -116.1 - 190.2 1955 1 331.8 - 235.3 -iO6.7 - 276.6 1956 A1,042.8 1 240.7 1 100.1 , 163.4 Table 8 PUBLIC EXPENDITTURES AtD REVENIMT (millions of ycn) Settled Accounts Estimates 1953 1954 1955 1956 1957 National Government Budget .Revenue 1/ Tax and stamp 782,818 798,402 795,958 879,717- 946,915 Government monopolies 159,703 125,654 114,276 112,713 118,267 Others 71,637 59,149 71,854 59,158 53,151 Total 1,014,228 983,205 982,088 1,051,588 1,118,333 E3e ndi ture s Administration 801,102 745,566 749,174 817,837 864,075 Yilitary & defense 155,093 154,699 135,968 140,765 141,165 Annuities & pensions 16,112 100,235 88,809 92,520 96,063 NTational debtu 44,857 40,262 44,218 38,530 36,161 Total 1,017,164 1,040,761 1,018,169 1,089,652 1,137,465 Balance - 2,936 - 57,556 - 36,081 - 38,064 - 19,132 Iocal Governrent Budgets Revenue 2/ Taxes / 336,053 366,778 381,489= 397,684 Other receiots! 89,?600W 107,800G/ 129,657-/ 134,858 Total 425,653 474,578 511,146 532,542 Exoenditures 618,900 710,900 567,4009/ 602,800 Balance - 193,247 - 256,322 - 56,254-/ - 70,258 Total Expenditures 1,636,100 1,751,600 1,580,700 1,637,800 As percentage of national income 28.1 28.6 23.3 23.5 I/ Actual tax and stamp revenue was apparently about Y 57 billion higher 2/ Estimates / Excluding money raised by bond issues. Source. Ministry of Finance Table 9 NATIONAL GOVERN INT DEBT (in billionr of yen) End of Fiscal Year 19952 1953 1954 1955 1956 Classification of Debt Bonds Domestic 335.2 445.0 440.9 425.8 409.3 Foreign 102.3 98.5 94.6 88.8 73.7 Total 437.5 543.6 535.5 514.7 483.0 Short-term bills Food bills 147.1 195.1 194.1 310.0 329.8 Foreign Exchange Fund bills 132.0 45.0 140.0 145.0 80.1 Total 279.1 240.1 334.1 455.0 409.9 Other borrowing 110.1 67.4 63.1 87.4 96.6 Grarnd Total 826.7 851.1 932.7 1,057.1 989.5 Holders of Debt Government 268.8 260.8 55.1 78.1 93.4 Bank of Japan 238.4 198.9 492.8 570.7 518.7 Others 319.5 391.4 384.8 408.3 377.4 Source: Bank of Japan Table 10 BATAIXCE OF TREASURY TRIVnACTITrg WITH THE PUBLIC (in billions c- yen) (-) surplus of payrments ()= surplus of receipts Speci.al Accounts, Total General Public Foreign excluding Fiscal Account Corporations Exchange Foreign Year Budget and Others Fund Total Exchange Fund 1952 /193.7 -172.7 -18.6 /2.4 /21.0 1953 /141.5 -176.4 /129.8 /94.9 -34.9 1954 /43.3 -159.L -74.1 -190.2 -116.1 1955: Total 61.3 -168.0 -169.9 -276.6 -106.7 First quart-r -15.3 -1.2 -31.4 -47.9 -16.5 Second qua--:>)r /38.9 -51.3 -51.2 -63.6 -12.4 Third quarte'r -31.9 -198.0 -52.5 -282.4 -229.9 Fourth quarter /69.6 /92.5 -34.8 /127.3 /162.1 1956: Total /200.3 -100.2 63 /163.4 First quarter -8.8 /27.6 -9.4 /9.4 /18.8 Second quarter /73.0 -36.7 -2.0 /34.3 /36.3 Third quarter /15.6 -155.9 -1.3 -141.6 -140.3 Fourth quarter /120.5 /64.7 /76.1 /261.3 /185.2 Source: Bank of Japan Table 11 1O\EY SIf UIPPLY A (ZT ES 1MfONEY SUJPPLY P CT. E TINES (in billions of yen' (average) End Currency Deposit 17holesale Prices Cons-umer Period with Public Crrency!' Total A11 Capital Coods Prices 1952 54008 2!48.G 789.6 100.0 100.0 100 1953 592.1 278.1 870.2 100.!! l10i4o 106.6 1951 585.3 261.7 8M7.0 99.7 103.1 113.4 1955 625.2 316.2 9141.L 97.9 101 3 112.2 1956 718,7 387.3 1,106.1 102.2 1 15.6 112.8 1956-Ilarch 2l.72/ 269.5.2" 791.21' 101.3 111.3 1957-MsIarch 6-'2.1 1/' 307.2/' 3.2' 106.6 127.1 115-7-/ 1/ As defined by the B3ank of Japan; current deposits less checks and bills held by financial institutions. j February. Source: Bank of Japan Table 12 SOJBtCES OF INCREASES IN 1NDUSTPIAL_FIfAECING (in billions of yen) - _ter~s ___xt e_r n___ C u on dr s onpanies Own _Fun_ s Total Loans and Discounts Year Grand Shares Debentures Loans Private Government Other Total. Pepre- Retained Total and Financial Financial Gov6rnmq7 t cia'ion Profits Discounts Institutions Institutionsi! Funds- 1Q51 859.3 69.6 36.0 753.7 640.2 54.7 59.4 496.2 210.8 285.4 (227.5) (41.0) (32.3) (154.2) (89.2) (5.8) (59.1) 1952 1,0l?2-7 122.3 37.0 863.3 796.5 -3.6 70.4 447.5 287.4 160.1 (300.0) (82.5) (33.0) (184.5) (81.2) (33.2) (70.1) 1953 1,064.8 165.8 41.3 857.7 735.8 111.7 10.1 660.5 368.2 292.3 (362.9) (102.4) (35.3) (225.1) (125.9) (92.0) (7.2) 1954 613.1 142.1 18.4 452.6 405.2 29.9 17.5 618.7 417.0 201.7 (302.5) (84.0) (16.3) (202.2) (121.4) (79.6) (1.2) 195. 679.2 97.5 26.5 555.2 466.2 65.R 23.3 724.6 490.6 234.0 1 (210.0) (60.8) (22.3) (126.8) (73.0) (38.7) (15.2) 1956 1,498.8 258.4 57,6 1,182.3 1,037.7 61.0 34.1 (4k73.0) (168.7) (50.4) (253.9) (210.2) (31.8) (11.9) 1i/Includlng special foreign exchange loans by the Bank of Japan D/ Including funds of the Trust fund Bureau, counterpart Fund and certain sp)ecial investment amounts. Source. Bank of Japan. Figures in parentheses denote funds devoted to the financing of new equipment. Table 13 SOURCES OF NEW FIN?TJiNCI iG BY IEMIUSTRY (Percentage) Industry Share and boind iss-ues, Share issues, retained profits and retained profits and depreciation reserves depreciation reserves Electric Power 1953 37.1 27.0 1954 37.2 30.7 1955 36.0 28.0 1956 49,4 29.0 Coal Ilining 1953 58.6 53.3 1954 57.4 55.1 1955 45.8 44.2 1956 76.6 72.9 Other hining 1953 65.8 51.9 1954 71.0 58.3 1955 67.3 60.1 395:6 77.8 67.5 Irorn and Steel 1953 41.3 29.1 1954 44.5 30.5 1955 59.5 43.5 1956 74.1 71.6 Non-ferrous 1,;Itals 1953 51.0 47.1 1954 62.5 56.4 1955 71.2 64.4 1956 70.7 68.3 Petroleum 1953 54.2 52.4 1954 68.8 66.1 1955 71.2 68.6 1956 52.5 51.0 Machinery 1953 52.4 48.3 1954 67.1 60.2 1955 67.3 61.0 1956 70.8 61.9 CheTnical 1953 61.8 56.2 1954 57.4 51.9 1955 57.6 53.5 1956 53.4 53.4 Textiles 1953 67.7 60.3 1954 73.4 66.9 1955 74.0 67.2 1956 61.6 55.6 Table 14 CAPITAL RAISED I- 14ARKET (in millions of yen) Bank 1 Corporate l/ Total 1/ Grand Year Shares )ebenture,-' Debentures- Debentures- Total 1952 127,279 60,348 37,047 97,395 224,674 1953 180,lll 75,994 39,194 115,188 295,299 1954 153,668 55,605 18,404 74,009 227,677 1955 111,629 58,556 26,58l 85,137 196,766 1956 254,426 48,278 57,564 105,842 360,268 1/ NTet of redemptions Source: M-nistry of Finance and Industrial Bank of Japan. Table 15 CORPORATE FINANCIAL RATIOS Last Half First Half Second Half First Half Second Half First Half __1953L__ _ 1954 95, 195.5 1256 QUICK ASSETS: CURRENT LIABILITIES All industry 53.09 50.94 54.15 58.04 57.41 55.10 Electric power 50.55 38.35 57.70 58.36 58.34 40.18 Manufacturing 51.37 50.21 53.24 56.82 56.25 54.29 Iron and steel 44.20 42.51 47.53 51.03 52.01 49.31 CURRENT ASSETS: CURRENT LIABILITIES All industry 112.66 111.40 113.68 115.17 116.09 112.36 Electric power 95.46 82.52 100.48 100.81 93.90 73.23 Manufacturing 122.60 121.14 123.17 125.24 126.78 123.88 Iron and steel 118.24 116.70 118.89 120.71 126.38 129.32 DEBT: EQUITY (Liabilities: Net Worth) All industry 175.18 156.66 151.36 156.81 163-38 169.79 El.1c2uic power 91.58 75.77 80.17 87.83 97-03 104.81 Manufacturing 157.09 152.24 144.65 143.50 149.61 153.77 Iron and steel 188.68 180.08 164.90 158.64 157.95 150.90 CURRENT LIABILITIES: NET WORTH All industry 125.56 108.72 102.55 103.81 107.14 113.64 Electric power 17.14 14.16 12.55 12.67 13.64 17.81 Manufacturing 128.27 123.41 114.85 111.78 114.57 119.30 Iron and steel 144-33 134.82 118.77 116.01 110.97 106.64 NET PROFIT: NET WORTH (after taxes) All industry 8.57 6.33 4.86 5.78 6.84 8.20 Electric power 1.73 1.78 1.61 1.99 2.17 2.06 Manufacturing 12.98 8.90 6.54 7.00 8.51 10.28 Iron and steel 5.07 0.14 0.62 3.17 5.51 8.51 NET PROP'IT: PAID-IN CAPITAL (after taxes) All industry 33.01 24.69 18.99 21.27 23.96 28.11 Electric power 16.69 15.36 14.43 15.21 16.34 14.71 Manufacturing 46.46 31.75 22.45 22.98 26.97 32.70 Iron and steel 21.70 0.57 2.59 12.74 20.13 30.58 DIVIDEND: NET PROFIT (after taxes) All industry 43.79 51.85 60.92 58.56 55.49 50.06 Electric power 71.02 78.12 83.18 78.86 73.42 81.59 Manufacturing 40.29 47.65 56.83 56.10 52.69 47.09 Iron and steel 45.51 57.61 72.20 50.63 48.87 37.79 iSource: Bank of Japan Table 16 ORDES IRECEIV1 B3Y JAPAIESE I\DIBSTRY FOR C-OHTN1ERY AND SHIES (in billions of yen) 1951 1952 1953 1954 955 1 Total orders 204.6 217.0 254.9 255.2 370.4 705.7 Excluding ships 132.7 158.5 190.4 186.7 104.4 422.3 Orders for account of Export and special procurement 288t 54.6 145.1 20415 Government and public bodies ,44.4;/ 52.2 38.3 55.4 Private domestic 162.0L/ 148.4 197.0 445.8 Unfilled orders - end of period 154.l/ l5l1:9/ 339.3 / 617.9 1/ Fiscal year. Source: Economic Planning Board Table 17 VALUE CF COi3TRUCTT0ON S2AR2S (in billions of yen) Calendar Reinforced Concrete Private Year Total and Steel Frame Residential 1951 170.8 57.1 67.7 1952 210.5 51.6 98.6 1953 269.9 83.1 127.1 1954 294.9 97.2 139.4 1955 292.4 96.4 142.8 1956 382.4 149.2 1S3.5 Source: Ministry of Construction TABIE 18 PRINCIPAL EXPORTS (quantity in thousands of unit; value in millions of US$) 1952 19V3 1954 1955 1956 Commodity Unit Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Cotton Fabrics Su./ 746.8 175.3 914.0 179.2 1,278.1 252.3 1,138.8 229.9 1,262.0 266.6 Ships and Boats No. 414 10.9 293 95.7 462 52.0 348 78.2 786 b/ 259.9 Iron and Steel MT 1,632.9 263.1 843.5 139.5 1,183.0 166.4 1,988.5 259.5 1,295.5 223.4 Synthetic Fabrics SY./ 303-3 66.1 380.6 75.4 583.4 109.3 895.6 154.7 1,165.8 221.9 Clothing LB2/ n.a. 37,6 19.9 37.5 34.6 56.0 67-3 134.4 75.9 122.6 Fish & Fish Preparations MT 99.9 45.5 121.3 60.7 140.7 74.2 155.1 75.6 196.5 120.6 Textile Yarn and Thread LB&/ 62.7 52.3 68.o 51.9 100.6 83.6 99.1 73.6 95.0 71.6 Toys and Games MT n. a. 16.1 24.9 23.5 33.9 32.1 48.2 43.1 65.8 60.7 Pottery and Glassware MT n. a. 33.5 91.4 34.0 101.5 40.9 128,9 50.4 152.0 59.1 Electrical Mach. & Appliances MT n. a. 18.6 11.6 14.9 17.9 23.0 29.0 30.9 40.8 50.8 Chemical Fertilizers MT 231.0 15.8 612.2 32.8 714.7 37,0 762.5 41.7 918.4 49.6 Plywood S X / 5.4 3-0 14.6 9.5 41.2 25.5 58.5 36.5 n. a. 42.7 Cement MT 798.4 17.8 795.3 17.1 904.6 19.0 1,206.2 22.5 2,111.7 38.0 Textile Machinery MT 26.6 21.3 22.1 16.5 60.2 45.5 30.1 26.6 30.0 36.7 Woolen and Worsted Fabrics sYz/ 1.1 1.8 5.0 6.8 12.1 16.8 17.8 27.8 22.3 33.4 Railway Vehicles MT 5-5 7.2 14.8 9.3 14.1 8.0 67.7 21.7 70.6 28.6 Silk Fabrics Sy,/ 31.4 12.5 17.9 8.7 25.9 13.6 30-0 15.7 47.9 25.2 Rubber Manufactures MT n. a. 4.5 4.4 5.6 7.5 8.1 11.9 12.1 21.2 22.5 Motor Vehicles MT n. a. 4.8 5.2 5.6 7.2 6.4 11.7 10.4 16.6 17.3 Optical Instruments KG n. a. 6.9 1,056.3 7.7 1,409.0 9.6 2,043.4 13.1 2,683.2 16.6 Photographic Equipment KG n. a. 3.0 309.3 5.9 352.0 5.8 572.2 7.8 1,090.2 13.5 Power Generating Machinery MT n. a. 6.1 4.3 4.7 4.6 5.8 6.7 5.9 7.2 8.2 Mining & Construction Mach. KG 3,723.7 2.3 1,714.0 1.0 2,619.5 1.4 9,081.7 6.4 7,820.0 5.2 Machine Tools MT 1. 2 1.0 1.1 1.1 1.4 1.5 1.5 2.0 1.6 1.4 Agricultural Mach.& Implements KG 832.9 o.6 1,266.0 1.4 960.0 1.3 1,115.1 1.4 1,043.7 1.0 Other Exports - 445.- 428.8 _ 33 68.7 - 7031. Total - 22.Q 12274.8 1.629,3 2.010.6 a Million square yards b/ 1,163,801 gross tons c/ Million pounds d/ Million square met vs TABLE 19 IMPOPTS BY COMMfODITY OROUPS AND SFTECTED COMMODITIES, OJUA.TTITY AYD VA1UE (quantity in thousands of unit - value in million U.S. dollars) 1952______1S 1NM__ 19SS196 Group and Commoditv Unit Quantity Value oquantity Value Quantity Value quantity Value Quantity Value Food - Total _ _ - 604.1 _ - 611.2 5 S 48.8 Wheat, unmilled MT 1,661.8 156.1 1,686.5 139.0 2,187.1 168.0 2,287.5 167.4 2,277.0 165,3 Rice - Total MT 978.5 184.4 1,079.1 214.8 1,432.3 250.9 1,246.4 196.7 759.6 108.3 Barley, unmilled MT 945.8 84.4 705.9 60.6 763.7 51.1 576.4 39.9 922.4 62.0 Maize, unmilled MT 66.9 6.1 186.7 14.6 194.9 14.4 342.6 25.9 344.8 25.5 Wheat Flour MT 8.9 1.1 24.1 3.1 28.3 3.1 32.6 3.2 45,9 4.4 Raw Sugar MT 682.5 92.4 1,046.9 115.0 1,011.9 107.6 1,062.6 114.4 1,192.6 126.7 Beverages & Tobacco - Total _- _- - Crude M e _ s. inedible excent FToel ta - 1.al4 _ _2 - l.,2- .5 _ _- 1.10-4 Oilseeds, Puts & Kernels MT 276.6 ?38.6 605.1 80.3 713.1 96.8 1,135.1 147.0 1,039.4 134.8 Rubber,Crude(incl.Synth.& Reclaimed) MT 80.5 49.4 127.4 50.3 100.9 43.2 109.1 74.7 139.1 88.6 Wood CM - 15.7 1,643.2 44.5 1,869.0 48.0 2,051.9 61.8 2,586.0 81.1 Sulphite Rayon Pulp MT 43.2 12.3 75.6 14.8 87.8 17.1 68.2 13.5 114.2 23.2 Wool & Other Animal Hair LB1/ 154.1 140.8 232.6 232.4 164.2 158.8 214.2 176.0 324.2 258.7 Raw Cotton L31/ 943.4 418.0 1,066.6 373.8 1,078.9 409.4 972.1 362.0 1,325.2 451.4 Iron Ore & Concentrates MT 4,768.1 92.5 4,290.2 61.3 5,oo4.8 66.2 5,459.5 81.5 7,869-5 146.5 Iron & Steel Scrap MT 505.8 27.6 1,140.8 62.8 978.1 43.9 1,287.0 63.8 2,583.5 183.4 Minersl els. 1 _ubricat & Related MateriaLs - Total - - 234.2 - ,288.8 - Z _2 - 290 - 412.6 Coal - Total MT 1,355.4 83.6 4,920.9 89.8 3,598-0 62.9 2,861.9 56.2 3,821.2 90.6 Petroleum, Crude & Partly Refined EL 4,264.5 101'.7 5,927.0 120.5 7,416.0 134.0 8,501.5 148.6 11,586,9 223.8 Petroleum Products MT - 48.8 3,197.0 78.5 2,911-3 70.3 3,542.3 84.2 3,295.2 90.0 imal & Vey.-Oils & Fats - Total - - 16.$ _ 2 - 36.4 - 33.7 TABLE 19 (CONTID) IMPORTS MY C014MODITY GROTJPS AND SETECTIED COI'MODITIES, QUAITTITY AYTD VAIUE (C,uantity in thousands of unit - value in million U.S. dollars) ~~~~~~9 5 9rou3n and Commodity Unit Quantity Value Quantity Value Quantity Value Qunntity Value Qunntity Value Chemicals - Total - - _ _ _ Manufactured Goods - To-ta-l - - 1. - 6. Ma_chi n2X T_rnn Lsort Eort - Total - - - 132.4 - Misc Manfatured ArtileSc - Total - - 1. - - 21. -1 MSc. Transactions & Comm. n.e.s. - - 0- .6 - 0._Q arand Total - - - 2,40.6 - 2A471.4 J3229.7 XOte: Details of table may not add to totals,.due to rounding. / Millions of pounds (LBS) ./ Actual number of ships and boats. Source: "Monthly Return of the Foreign Trade of Japan"t, Ministry of Finance Tokyo: 1952-1956- Tr!LE 20 rDE EY MGlO0RMPWIUYL iEPS Chanr7e in 1956 compred to 1952 (in rrllions of US,,) E x p o r t sI m p o r t s 1956 Increase % Increase 1956 Tncrease Increase 'ctual over 1952 over 1952 Actual over 1052 over 1952 rin ' rm mn e ,nn 4 North Ximerica 612.5 357.3 1140.1 1,210.3 260.5 27.4 U.S. (543.3) (309.0) (131.9) 1,064.5 (296.2) (38.6) Latin America l.8.0 139.3 2856.0 384.6 285.9 288.7 N.W.W. Europe 191.5 26.7 16.2 158.8 61.9 63.9 Southern Euromce L42.1 30.4 260.0 27.9 - 11.1 - 28.5 Eastern Europe 12.2 9.6 369.2 13.14 9.0 204.5 D-fiddle East 96.7 67.6 232.3 263.4 135.8 106.4 Southeast Asia 664.4 203.6 44.2 662.8 262.8 65.6 Other Asia 260.5 91.2 53.9 162.5 28.9 21.6 Oceania 50.6 11.7 30.1 287.6 136.1 89.8 Africa 382.1 291.3 306.5 58.1 33.8 137.1 Total 2,500.6 1,227.7 96.5 3,229.7 1,201.6 59.2 E'lZ 20 (con-t'd) LRADE BY GFOCRAT75iy' CAL I PEAS (in milliors of 1:,5,) B alance AActual Actual N iet 5ai () 1952 1956 or Loss (-) in 1956 North America - 694.6 - 597.8 - 96.8 U.S. (- 534.0) (- 521.0) (* 13.0) Latin America - 50.0 - 196.6 - 1b6.6 1.7. I.,. Europe > 67.9 + 32.7 - 35.2 Southern Euurope - 27.3 . 1li.2 4 11.5 Eastern Europe - 1.8 - 1.2 e 0.6 I:iid.dle East - 98.5 - 166.7 - 68.2 Southeast A sia - 60.8 . 1.6 - 50.2 Other Asia - 35.7 + 98.0 ^ 62.3 Oceania - 112.6 - 237.0 - 124.14 Africa . 66.2 ^ 323.7 ^ 257.5 lbtal - 755.2 - 729.1 * 26.1 RTBLE 21 WNt DJEVFLOPMElNT OF OPEN1 f CCOUNT BALENCES End of Year (or month) 1952 1953 1954 1955 1956 1957 R e m a r k s Country (mIrch) Argentine E 17,139 I 19,598 1 20,171 E 147,188 E 57,780 E 514,096 Terminated on Apr. 1, 1956 Brazil E 5,2145 I 11,157 E 10,6314 I 5,860 E 6,9146 I i, ll Ar 1 China ( liwan) I 1,039 I 7,930 E 1,7)46 I 11,986 E 11,388 I 9,185 Egypt - I 23 I 2,055 E 994 I 9,522 I 5,363 Finland E 117 E 836 F 1,862 E 557 E 692 E 391 Thrminated on Flr3arch 31,1957 French Union E 10,7142 I 5,570 I 332 I 2,788 I 19,280 I 5,5)49 Thrminated on Dec. 31, 1956 French Inclo-China E 1,658 I 7,003 E 190 I 48 E 62 E 4 Greece - - E 108 I 2014 I 1.422 Indonesia E 71,832 E 117,217 E 171,937 E 178,652 E 175,792 E 165,735 Italy - I 1,421 E 2,1421 I 1,236 I 165 0 Termina-ted on Jan.14, 1956 Korea E 5,573 E 31,351 E 147,446 E 47,022 E 116,712 E 146,943 Netherlands I 52 I 2,573 E 3,65) I 2,3314 I 2,101 E 77 Philippines I 14,865 I 6,159 I 16,119 I 4,578 I 2,607 I 3,313 Sweden E 8,089 I 9,557 I 1,678 E 3,372 E 3,9196 E 3,1652 7brminate6 on 2Apr. 114, 1956 .nd E 6,198 E 4,1461 E 1 962 E 9,160 E 1,43' E 1,4314 Terminated on Apr. 15, 1956 TvrRey - - - I 1,110 E 2142 E 2614 Trmina ted on West Germany, E 1,001 I 13,679 I 12,669 I 12,650 I 1,320 I 2,071 Sept.30, 1955 T o t a 1 B 121,7 B 69,271 B 191,904 E 244,539 B 26,571 B 263,195 TMBLE 22 JAPAN: BkL1.NC OF P. YTNTS (11illionsof T35.-) 1952 Receipts Payments Balance A. Current hransactions Comnmercial Trade (f.o.b.) 1,288.6 1,701.3 - 412.6 Non-Mlonetary Cold 5.5 - e 5-5 Foreign Thavel 8.1 4.9 * 3.2 Transportation 71.3 223.3 _ 151*9 Insurance 5.5 15.4 - 9.9 Investment Income 6.0 10.9 - 4.9 Government Transactions: Foreign !iAlitary Expenditures 787.7 - + 787.7 Other 3.7 5.9 - 2.2 Pliscellaneous 15.0 39.6 - 2t.6 Private Donations W4.8 15.7 S 29.0 Official Crants 5.4 - +5.4 Reparations _ _ - - Total 2,242.2 2,017.5 - 224.7 B. Private Capital L42.0 4.6 + 37.3 C. Official and Banking Capital (exclud- ing gold and foreign exchange holdings) Long-term Credits 116.6 - 116.6 Short-term Credits (net): Dollar Usance Sterling Usance EXIM Bank Cotton Credit ' 39.7 Oter & 29.4 Total -7.5 D. Errors and Orrissions ^ 0.7 E. Total A throuch D T 215.2 F. Net Change in Coldc and Foreign Exchange Holdings cold -11.° Dollars + 17-.5 Sterling . 50.7 Open Account ^ 1.2 Total + 215.2 a/ Includes $112.5 million payments on Japan's subscriptions to the ~ * INIF and IBRD TABLE 23 J!pN B,f, RLNCE OT' P?'YUEN-TS (millions of TJS,) 1953 Receipts PayJments Ba1 ance A. Current Transactions Commercial lrade (f.o.b.) 1,257.8 2,oI9.6 - 791.8 Non-Y.onetary Cold 2.3 - F 2.3 Foreign 'TaveL 9.9 6.9 - 2.9 Transportation 76.6 2116.9 - 170.3 Insuran ce L. 8 17.7 - 12.8 Investinent Inco.me 11.7 3t.9 - 23.1 Government -TIansactions: Foreign military expenditures 803.2 - " 803.2 Other 7-5 8.7 - 1.1 T'!iscellaneous 17-7 53.1 -354 Private Donations 23.0 2.0 + 21.0 Official Crants _ _ Repara tions Total 2,215.1 2, L20.2 - 205.1 B. Private Capital 23.1 -C.7 - 17.6 C. Official and Banking Capital (excluding gold and :oreign exchange reserves) Long term 4o.4 197.5/ - 157.1 Short-term (net) Dollar Usance - Sterling aUsance 2.0 EXII'T Bank Cotton Credit - Other + 208.0 Total 5 52.9 D. Errors and Omissions + 1.5 E. Total A throueh B - 168.2 P. Net Change in Cold and Foreign Exchange Holdings Gold - 2.3 Dollars - 28.0 Sterling - 1L6.x Open Account - 52.5 Total - 168.2 a/ Includes 187.5 million local currency subscription to IITF. TrB PLE 24 J_ Pt!lT 1 iT BlJ ;TE OF PY'ET TS (millions of US'S,) TRe ceipts Payments Bal]an ce r Current T_ansactions Commercial Trede -lf.o.b.) 1,611.2 2,0L0.5 - 429.2 Non-lionetary C-old 2.6 - 2.6 Foreign Thave 11.2 6.7 . n?ansportation 89.7 255.8 - 166.1 Insurance 8.)4 19.9° -ll. Investment Income 8.2 7.0 - 38.7 Government Thansactions: Foreign militgry expenditures 602.3 - 602.3 Other 12.0 11.1 0.9 I iscellaneous 25.7 70.7 _ LL.9 Privarte Donations 31.9 2.6 + 29.3 Official Gra nts - 0.1 - 0.1 Repara tions _-__ _ Total 2,1,03.8 2,15L.7 - 50.9 B. Private Capital 5X1. L0.8 + 13.6 C. Official andl Banking Capital (excludin1- gold and foreign exchenEe holdings) Long-term 10.8 8.8 - 2.0 Short-term (net): Dollar Usance . 1.0 Sterlinrg Usance ^ 62.0 EXIi4 Bank Cotton Credit 35.4 Other i 36. 9 Tb tal 137.3 D. Errors and Omissions ~ 12.7 E. Total A through T ) 1127 * F. Met C-hanre in Gold and Foreign Exchange Holdi.n2s Gold 2.6 Dollars - 125.0 Sterling = 112.0 Open Account O 123.1 Total ; 112.7 TASL23 25 JA PAN: B' L,Nm7 CE -P87V1 ,TJITS (lillions of USi,) 1955 P,eceipts Payments Balance A. Current Tlhnsactions Commercial Trade (f.o.b.) 2,006.4 2,060.8 -5L. Non-11one tary Gold 1.5 - . 1.5 Foreign fravel ll. 2 8.0 F 6.2 Thansmortation 127.3 276.0 - 1l8.6 Insurance lO.14 19.0 - 8.6 Investment Income 114.0 55.L - 41.1 Government 1ransact-ions: Foreign miLlitary expenditures 505.1 _ + 505.1 Other 18.5 13.2 + 5.3 .NLiscellaneous 22.0 E2.2 - 60.2 Private Donations 33.0 2.3 ^ 30.5 Official Grants 12.6 - 12. 6 Reparations - 21.7 - 21.7 Total 2,765.7 2,539-1 226.5 B. Private Capital 109.3 2bo1 4 85e2 C. Official and Danking Capital (excluding gold and foreign exchange holdings) Long-term 64.6 15.5 4 19.1 Short-term (net): Dollar Usance Credits 4 52.0 Sterling Usance Credits 4 33.0 EXIM Bank Cotton Credit - 32.9 Other - 58,6 Total 1 42.6 D. Errors and C7dssions - 1L.9 E. Total A through B 4 339.4 F. Net Change in Gold and Foreign Exchange Holdings Gold 4 1.6 Dollars 4 226.0 Sterling + 59.2 Open Account X. 52.6 Total 4 339,4 ,BILE 26 JI3 PYN: BI LLNE CF PO YNEF2S (Millionsof US40) 1956 Receipts Payments Balance A. Current Thansactions ConLmercial T2ade (f.o;.) 2,1457.9 2,601.9 - 1114.O Non-;None t'a ry Cold OA. 4 - O 0.* LTavel 16.5 12.3 h 4.2 Transportation 209.8 501i.8 - 295.0 Insurance 12.0 2)j.6 - 12.6 Inviestment Income 27.2 65.5 - 38.3 Government Transactions: Foreign military expenditures 1493.1 - 493.1 Other 25.9 19.3 F 6.6 Miscellaneous 32.2 l1hI.7 - 82.5 Private Donations 34.2 1.3 O 32.9 Official Grants 8.8 - . Reparations _ 17.6 - 17.6 Total 3,314.0 3, 362.1 - 46.1 B. Private Capital 1119.l 151.1 - 2.0 C. Official and Banking Capital (exclud- ing gold and forei'n exc'ange holdi ngs) Long-term 65.6 21.1 e 24.2 Short-term (net) Dollar Usance CredLts t 74.0 Sterling Tsance Credits t 36.5 EYXI Bark Cotton Credit ^ 29.1 Other 41.1i Total * 2014.9 D. Errors and Omissions t 20.7 E. Total P thrcuph DD .- 175.5 F. Net change in Cold and Foreign Exchange Holdinp:s Cold + 0.4 Dollars t 300.0 Sterling - 147.0 Open A.ccount + 22.1 Total . 175.5 TLBLE 27 GOLD AND FOREIr-FT cXCPU j;TE RESERVS (in millions of USi,) Gross N e t Total Total Gold US Dollar Sterling Open a/c 1952 1,186 l,lh6 - 16 742 266 122 1953 1,01? 913 18 708 118 69 1954 1,130 - -- 921 21 . 4- S 168 192 1955 1, 469 - 1L 253 23 794 195 245 1956 1,6i,6 1,313 23 - 1,012 11 267 1957 (OSlar,) 1,126 1,023 23 513 - 77 263 TABLE 28 EXTERSAL DEBT SERVICE (in thousands of U.S. dollar equivalents) Payable in ?2T i4Currencies i _nodsabl2 in LYen Grand Total. Total Total Total Total Outstanding in Outstanding Service Outstanding Service Outstanding Service 1= January l Dollara Sterling Lrza Other _Total Jaa y 1 __- Januar.yt 1 - January 1 1954 492,794 14,135 27,059 41,194 - 492,794 41,194 11g55 478,303 13,272 51,087 64,359 200,000 - 678,303 64,359 1956 504,128 25,810 33,853 I/ 59,663 200,000 20,000 59,500 763,628 79,663 1957 519,584 22,500 27,453 4,210 45 54,208 730,000 45,000 59,500 - 1,309,084 99,208 1958 485,801 22,081 32,536 1,060 65 55,742 685,000 45,000 108,850 1,190 1,279,651 101,932 1959 448,988 31,107 27,135 1,06o 66 59,368 64o,ooo 45,000 108,850 3,412 1,197,838 107,780 1960 409,086 31,371 24,090 1,074 185 56,720 595,000 45,000 108,805 4,492 1,112,891 106,212 1961 370.905 30,932 22,041 1,074 185 54,232 550,000 45,000 108,662 4,601 1,029,567 103,833 1962 334,351 27,541 81,872 1,074 185 110,672 505,000 45,000 108,405 4,709 947,756 160,381 1963 238,618 42,05c 28,372 1,074 185 71,681 460,000 45,000 108,029 4,813 806,647 121,494 1964 179,370 25,987 9,593 1,074 185 36,839 415,000 45,000 107,533 4,915 701,903 86,754 1965 151,166 13,380 8,091 1,074 185 22,730 370,000 45,000 106,913 5,020 628,079 72,750 1966 135,861 12,232 7,925 1,074 185 21,416 325,000 25,000 1o6,163 5,119 567,024 51,535 1/ Less than $500. N.B. The figures of total debt outstanding and service payments are exclusive of the U.S. Export-Import Bank cotton credit which turns over each year, and of short term (9 months) credits amounting to $115 million granted to Japan on June 28, 1957 by the Export-Import Bank for the purchase of various U.S. agricultural commodities. Source: IBRD, Economic Staff.