Japan, We Have A Deal For You

We have oil we need to pass on to you.

Forget Justin. He can't tell you apart from his Chinese bosses:

For Japan, which relies on imports for virtually all of its oil, lower prices are positive for the economy and stimulate economic activity, working similarly to tax cuts, according to Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.

“But the negative impact of cheap oil prices is large for Japan, which relies heavily on the manufacturing industry,” Akuta said.

The nation paid ¥7.98 trillion for oil over the course of fiscal 2019, amounting to about 3 million barrels of crude per day at an average price of $67.82 a barrel, according to calculations by The Japan Times based on trade data issued by the Ministry of Economy, Trade and Industry.

If prices hover around $30 per barrel for this business year, which started in April, Japan might theoretically shave off more than ¥1 trillion in annual crude import costs — which could help shrink the goods trade deficit posted in each of the past two years.

Theoretically, that would put downward pressure on the prices of energy and manufactured goods, helping push up consumption and making travel cheaper.

But the benefits of cheaper prices to households and businesses would likely be limited, as oil demand has already fallen more than 10 percent due to requests from the government for people to adopt what it calls a “new lifestyle.” That new lifestyle includes telecommuting, even with the lifting of the state of emergency in 39 prefectures earlier this month, and in three more prefectures in the Kansai region on Thursday.

The lockdown won't last forever ... at least not in Japan.