In a recent commentary, Andrew Spiers, a London-based consultant at the international market research firm Chem Systems , said that high oil prices could halt Asia's economic recovery. Already, he noted, petrochemical companies are cutting production in Asia. Japan's JSR Corp, which is a major producer of synthetic rubber, revised its earnings forecast downward because of high naphtha prices. Mitsubishi Chemical made a similar announcement, and other Japanese chemical companies have expressed concern about high raw material prices. Other than oil prices, Asia is on weak footing for several other reasons.
Banks are still a problem in Japan.
The fragility of the Japanese banks' financial position has slowed down economic recovery for nearly a decade. Public funds, likely involving a tax increase, would help to accelerate the financial sector cleanup. But the uncertainty concerning the leadership of the country is preventing the adoption of radical measures. Moreover, the government has little ability to direct taxpayers' money into the banking system because it is grappling with a large budget deficit. An economic downturn would make more difficult the generally slow restructuring process many of Japan's chemical companies have embarked on.