Friday, June 24, 2005

Hosoda and Takanaka voice concern on economic development

by Brian Turner

In Japan on Friday, chief cabinet secretary Hiroyuki Hosoda said that rising oil prices concerned him because they have a negative effect on global economic development.

In separate remarks, Economics minister Heizo Takanaka worried 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.

According to some economists, oil price hikes do not affect as directly as they do many other large economies. However, they can affect the Asian nation indirectly because a global economy weakened by rising oil prices will tend to lessen demand for Japanese goods.

There is also a theory that Japan’s economy is not affected as directly or as much by high oil prices because it was affected so much by high prices in the 1970s. This has to do with the fact that high prices in the ‘70s influenced manufacturers to pursue energy efficient practices as well as because the appreciation in the value of the yen has cut the proportion of the gross domestic product going to oil imports.

Recent data suggests that Japan’s economy is less reliant on overseas demand than it was previously.

 

 

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