Higher oil prices due to the Mideast crisis will have a small impact on Japan's economic growth in the fiscal year ending March 31 because the Japanese economy is less vulnerable to oil shocks than in the past, Japanese research institutes said.
The oil price rise will cut Japan's growth in 1990-91 by no more than 0.1 percentage points, with the economy growing at a rate of at least 4.0 percent compared with 5.0 percent growth in 1989-90, according to reports by the institutes.Japan's economy has become less dependent on crude oil since the two previous oil shocks in 1973-74 and 1979-80, economists said.
In addition, Japan has large stockpiles of oil that it can use to reduce the impact of the current shock, and oil price rises since the Persian Gulf crisis began have been moderate compared with the earlier shocks, the economists said. In those shocks, oil prices tripled and then doubled.
Since the Iraqi invasion of Kuwait on Aug. 2, oil prices have risen by 60 percent to about $30 a barrel.
Sumitomo Bank's research division said gross national product was likely to rise 4.3 percent in 1990-91, only 0.07 percentage points slower than its forecast in June.
The latest forecast was based on the assumption that 1990-91 crude oil prices would average $20 a barrel, said Yasuo Miyakawa, a Sumitomo economist.
"In the last 10 years, the Japanese economy has become less vulnerable to oil price movements as Japan's real GNP grew by some 145 percent, but by contrast oil imports fell by some 20 percent," Miyakawa said.
Nippon Credit Bank's September forecast for Japan's 1990-91 GNP growth was unchanged from its July forecast of 4.0 percent.
"High oil prices coupled with the recent rise in Japan's official discount rate will tend to dampen Japan's economic growth by 0.3 percentage points, but they will be offset by strong corporate capital expenditure," said Takashi Watanabe, manager of the economic research division at Nippon.