Japan concern that economic recovery to be hit by oil prices

In Japan on Friday, two government officials expressed fears that rising oil prices could hurt Japan’s recent economic growth.

Economics minister Heizo Takanaka said that while there are signs that the nation’s economy is showing signs of coming out of a “soft patch,” oil price rises are putting that recovery at risk.

In separate remarks, chief cabinet secretary Hiroyuki Hosoda said that rising oil prices concerned him because of their negative effect on global economic development. According to economists, Japan is not affected directly by oil price hikes as much as many other large economies.

However, there might be an indirect effect as a global economy weakened by rising oil prices might lessen demand for Japanese goods, although recent data suggests that Japan is less reliant on overseas demand than it was previously.

There is also an idea that Japan is not affected so much by oil prices because it was affected so much by high prices in the 1970s. This is partly due to the fact that high prices in the ‘70s influenced manufacturers to pursue energy efficient practices and partly due to the fact that the appreciation in the value of the yen has cut the proportion of the gross domestic product going to oil imports.

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