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Japan can withstand crude oil price of $100 per barrel: think tank.

TOKYO, Aug. 30 Kyodo

Japan has realized an energy-saving economic structure that can remain stable even if crude oil prices soar to $100 per barrel, a leading economic think tank said Tuesday.

The Daiwa Institute of Research came up with the estimate on an assumption that Japan's real gross domestic product will contract only 0.1 percent for every $10 rise in crude oil prices per barrel.

Specifically, personal consumption and private-sector capital spending are likely to drop 0.08 percent and 0.5 percent, respectively, even if crude oil prices climb by $10 per barrel.

In addition, Daiwa forecasts a fall of 0.5 percent in operating profit for companies listed on the First Section of the Tokyo Stock Exchange.

In terms of an index calculated by dividing the consumption of crude oil by real GDP, Japan's reliance on crude oil stood at 36 in 2003 against the base figure of 100 for the United States in 1990, down from 87 at the time of the first global oil crisis in 1973, Daiwa said.

Given China's heavy reliance on crude oil as shown by an index reading of 175 for 2003, Daiwa warned that higher crude oil prices may adversely affect Japanese companies having close business ties with China.
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Publication:Japan Energy Scan
Date:Sep 5, 2005
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