Capital Economics: Impact of Iran conflict on Japanese economy may be Limited.

Capital Economics stated in a report that the impact of the Middle East conflict on the Japanese economy may be limited. Marcel Thieliant, the agency's head of the Asia-Pacific region, pointed out that although Japan imports almost all of its energy - with 94% of its oil imports coming from the Middle East by 2025 - its oil inventories are close to record highs relative to domestic consumption. In addition, only about 10% of Japan's liquefied natural gas imports come from the Middle East, and natural gas can easily be replaced by coal in power generation. However, Capital Economics warned that other economies in the region lack the buffer that Japan has, and any slowdown in these economies could put pressure on Japan's exports. It is expected that the inflation rate will rise from 1.5% in January, while the likelihood of the Bank of Japan raising interest rates in March or April has decreased.