Financial experts believe that many Japanese preferred to stay and spend their money at home rather than travel abroad because of panic caused by SARS.

Japan's Finance Ministry said on Thursday the chronic deficit in the services account was reduced since the surplus grew 28.5 percent in May from a year earlier to 1.35 trillion yen ($11.25 billion).

The current account surplus measures the flow of goods, services and investment income, and other financial transfers.

 

The May figure passed the 1.19 trillion yen consensus forecast by economists, who gave estimates ranging between 835.6 billion and 1.38 trillion yen.

 

In April, the current account surplus rose to 1.26 trillion yen from the year-earlier 1.09 trillion, the ministry said.

 

"The effect of SARS was very clear in May, with many people cancelling travel to Asia," a finance ministry official said.

 

"We expect the June account surplus will again be boosted by the continued reduction of the services deficit," he said.

 

The size of the services deficit was cut by more than a half to 175.8 billion yen from 402.5 billion yen.

 

SARS effect

 

Ministry officials attributed that to the decline in the number of Japanese travelling abroad.

 

Official figures show 575,000 left the country from 1,279,000 due to the spread of SARS (Severe Acute Respiratory Syndrome).

 

The virus has killed more than 800 people, most of them in Asia since it was first detected in the southern Chinese province of Guangdong in November.

 

The tourism industry in the region as a whole has been hit hard because of the virus.

 

Officials and economists have predicted the negative effects on the tourist figure are likely to continue for the next few months even though the World Health Organisation has declared the disease to have been contained worldwide.