Rising Oil Prices to Cut Japan’s GDP By 0.4 Pct: Govt Estimate

Tokyo, Oct. 12 (Jiji Press)–Rising crude oil prices will trim Japan’s nominal gross domestic product by 0.4 pct in calendar 2005, the Cabinet Office estimated Wednesday.

Rises in crude oil prices will have an effect equivalent to 2 trillion yen in income transfers from Japan to overseas, which translates into a 0.4 pct cut in Japan’s nominal GDP.

The Cabinet Office presented the estimate at a cabinet meeting following the announcement of its monthly economic report for October.

The impact will be twice that of 2004, when rising crude oil prices trimmed Japan’s GDP by around 0.2 pct.

But the impact on the Japanese economy is relatively small, compared with other countries. In the United States, high oil prices will cut nominal GDP by 0.5 pct, and in China by 0.9 pct, Cabinet Office officials said.

Japan’s greater fuel efficiency is minimizing the impact, the officials said.END