TOKYO: Japan is hurting from the Iran war ahead of Prime Minister Sanae Takaichi’s visit to Washington next week. She has promised to be “candid” with the United States president.
How forthright Japan’s first woman premier can afford to be in their Mar 19 meeting, and how receptive President Donald Trump will be, remains to be seen, however.
The world’s number-four economy is the fifth-biggest importer of oil, 95 per cent of it from the Middle East and 70 per cent passing through the Strait of Hormuz, now effectively closed.
On top of oil rising above US$100 per barrel, Japan’s hefty import bill has also risen because its currency has fallen against the dollar, as every barrel of crude – traded in the US currency – costs more yen to buy.
On Wednesday, Japan was the first to announce a release from its strategic oil reserves, with Takaichi, 65, saying Japan was being “severely impacted”.
Trump has said that defeating Iran’s “evil empire” was more important than crude prices.
Pricier oil – and also gas – risks making life more expensive for firms and families alike, which could hurt Takaichi’s popularity.
Just over four weeks ago, she was basking in a landslide election victory, but polls published this week suggest that the honeymoon is souring.
After rice prices doubled last year, Stefan Angrick, senior economist at Moody’s Analytics, said that food, in particular, could jump again.
“(You) need energy to produce food. And natural gas, for example, is often used to produce fertiliser,” Angrick told AFP.
Growth is already feeble – 0.3 per cent in the last quarter – and Takaichi last year pushed through a 21.3-trillion-yen (US$134 billion) stimulus package.
Any extra efforts could worry investors who are already fretting – bond yields hit records in January – about Japan’s colossal debts.
