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ECONOMY > Economic Indicators

Japan alarmed by oil price hikes after Saudi attacks

  • September 19, 2019
  • , Kyodo News , 5:23 p.m.
  • English Press

TOKYO – Japan is alarmed by the oil price increases following recent strikes on key oil facilities in Saudi Arabia, according to the government’s monthly economic report released Thursday.

 

The Cabinet Office, however, maintained its assessment of the Japanese economy in the September report, saying the world’s third-largest economy “is recovering at a moderate pace” with “weakness continuing mainly in exports.”

 

The report was compiled days after two oil plants in the Middle Eastern country were attacked on Saturday, a move that pushed the key futures price to a four-month high of $63 per barrel at one point.

 

The office said attention should be given to “the effects of oil price hikes,” in addition to other overseas factors, including the escalation of U.S.-China trade tensions and the Chinese economic outlook.

 

As the government is scheduled to raise the consumption tax rate to 10 percent from 8 percent on Oct. 1, the report said the government will take all possible measures for economic and fiscal management to ensure the hike “will not affect the recovery trend of the economy.”

 

A government official who briefed reporters said there had been no major last-minute buying ahead of the tax increase.

 

The official said that judging from automobile and house sales, “It is fair to say the impact is not as large as the previous hike” of the tax from 5 percent to 8 percent in April 2014.

 

The government is taking measures such as extending tax breaks on house and auto purchases in an effort to contain any rush in demand and a possible plunge in consumption after the hike.

 

The report maintained its evaluations of key components, including consumer spending, capital expenditures and exports.

 

But it said housing construction has shown “a weak tone recently,” compared with “almost flat” in the August report, the first downgrade since December 2017.

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