Japan sees stagflation risk rise

Escalating tensions in the Middle East following joint military strikes by the United States and Israel against Iran are raising concerns in Japan about potential economic fallout, including stagflation risks.

Experts have questioned the legality of the attacks and warned that further escalation could disrupt traffic through the Strait of Hormuz, a critical route for global energy shipments. Any prolonged disruption would pose a severe challenge to Japan's economy, which depends heavily on energy supplies from the Middle East.

Tokyo stocks fell sharply on Wednesday amid a global sell-off triggered by rising oil prices and geopolitical uncertainty. The benchmark Nikkei 225 index closed down 3.61 percent, while the broader TOPIX index dropped 138.50 points to 3,633.67.

Figures from Japan's Agency for Natural Resources and Energy show that over 90 percent of the country's crude oil imports come from the Middle East, with most shipments passing through the Strait of Hormuz. Any prolonged disruption could push global oil prices even higher.

While the Japanese government said at a parliamentary committee meeting on Monday that its strategic petroleum reserves could cover roughly 254 days of domestic consumption, a sustained escalation in the Middle East could still put pressure on the country's energy supply.

Hideo Kumano, chief economist at the Dai-ichi Life Research Institute, said oil prices could surge significantly if tensions continue to escalate.

Persistently high oil prices would likely drive up gasoline and electricity costs, he said, and if the conflict drags on, the impact could spread more broadly across inflation.

Takahide Kiuchi, executive economist at Nomura Research Institute, warned that Japan could face stagflation if Iran were to block the Strait of Hormuz for an extended period.

The impact could also extend to the broader, real economy. Akuta Tomomichi, senior economist at Mitsubishi UFJ Research and Consulting, told NHK that every $10 increase in global oil prices would raise Japan's crude import costs by roughly 1.3 trillion yen, potentially affecting industries including agriculture, fisheries and food production.

Kiuchi added that gasoline prices in Japan are likely to rise in the coming weeks. If crude oil and liquefied natural gas prices remain high, electricity and gas bills could also rise after the summer.

Govt response criticized

The Japanese government's response to the US-Israel strikes has also drawn criticism.

According to the Mainichi Shimbun, at a parliamentary committee meeting on Monday, Prime Minister Sanae Takaichi urged Iran to seek a "diplomatic solution" and called on Tehran to refrain from actions that could "destabilize the region", including developing nuclear weapons, which she said is "absolutely unacceptable", and attacking neighboring countries.

At the same time, Takaichi said her government would refrain from offering a "definitive legal assessment" of the bombardment launched by the US, Japan's close security ally, and Israel, as Tokyo does not have "detailed information".

Ukeru Magosaki, director of the East Asian Community Institute in Tokyo and former Japanese ambassador to Iran, told China Daily that US-Israel strikes violated international law and lacked justification.

"The US launched the strike under the pretext of Iran's nuclear development, but the legal grounds for such action are questionable," he said.

Since the attacks, protests have taken place across several parts of Japan, including Tokyo and Okinawa.

On Tuesday, about 500 people gathered in the rain near Shinjuku Station in Tokyo for a demonstration organized by civic groups and opposition parties, calling on the United States and Israel to immediately halt their attacks on Iran.

Tomoko Tamura, chair of the Japanese Communist Party, said the "preemptive strikes" by the US and Israel violated the United Nations Charter and international law, adding that international pressure to stop the attacks could become "a force to immediately halt the war".

houjunjie@chinadaily.com.cn