Japan's current-account surplus will be dented by the extra imports that it will need to make up shortages and facilitate reconstruction following the earthquake and tsunami. There will also be a negative impact on Japanese exports, in part owing to the loss of industrial output and problems with supplies of components. Most of these effects will occur in 2011, and we therefore expect the current-account surplus to fall to US$173.9bn (2.9% of GDP) this year, from US$196.1bn (3.6% of GDP) in 2010. In 2011-15 the surplus is forecast to average 3.1% of GDP. Merchandise exports will rise by 6.1% a year in value terms in the forecast period, owing to increases in volumes and also in prices for Japanese goods. The expected expansion in imports will not be rapid enough to prevent the merchandise trade surplus from rising in value terms. The other major factor underpinning the current-account surplus in 2011-15 will be the large surplus on the income account that is a consequence of Japan's substantial stock of overseas direct and portfolio investments. The services balance will remain in the red; this will be mainly the result of outbound tourism, which will keep services debits high.