Japan earthquake, tsunami could add to oil price pressure

Fears the fledgling global economic recovery could be derailed are growing after the giant earthquake and tsunami in Japan, the world's third-biggest economy.

Although global oil prices fell, economists warn the serious issues with Japan's nuclear energy reactors could put short- and long-term pressure on oil prices. New Zealand economists were unable to comment yesterday on what the disaster would mean here.

As of last year, Japan was New Zealand's fourth-largest trading partner and kiwifruit, natural cheese and beef made up the top three food exports to Japan.

According to the Japan New Zealand Business Council, New Zealand exports to Japan in 2009 totalled $2.8 billion and imports from Japan were valued at $2.9b. Melanie Palmer, spokeswoman for kiwifruit marketer Zespri, said Japan accounted for 30 per cent of its revenues and took about 17 per cent of its crop volume. Japan is New Zealand's fifth-largest investor, totalling $11.5b at March 2009 while New Zealand investment in Japan was $3.6b.

Japan is also one of New Zealand's top tourism markets. Travel operators have already reported a drop-off in Japanese bookings to New Zealand after the Christchurch earthquake. A market sell-off is expected to begin today as the extent of the damage becomes clear.

- © Fairfax NZ News