Higher oil prices amid signs of a global economy slowdown could affect profits and consumer spending in Japan and other parts of the world, Finance Minister Fukushiro Nukaga warned Wednesday.
“Expectations of inflation could make it even more difficult for financial authorities to manage their economic policies,” Nukaga said in a speech in Tokyo at the Foreign Correspondents’ Club of Japan. “If the recent higher oil prices continue, it could largely affect corporate profits and household consumption worldwide.”
His remarks come at a time when the global economy is slowing as the U.S. subprime mortgage crisis drags on.
The Finance Ministry released data Wednesday showing that companies’ pretax profits plunged 17.5 percent, hit by soaring oil and raw materials costs. Sales dropped 1.5 percent on year, marking the first decline in five years.
Nukaga said that the world economy, surging food prices and climate change will be high on the agenda at the Group of Eight finance ministers meeting in Osaka from June 13-14, which he will chair.
Japan, as host country, wants to take the lead in urging other countries to join a multilateral fund proposed by the U.S., Japan and Britain to curb climate change, Nukaga said.