Major firms predict economic growth

Major Japanese companies forecast a 0.9 percent growth in the nation’s economy in fiscal 2000, their first positive projection in five years, according to an Economic Planning Agency survey released Tuesday.

The projection had been on the decline since fiscal 1995, when the surveyed firms forecast 1.8 percent growth. In fiscal 1999 they said there would be a 0.2 percent contraction, the first prediction of shrinkage since the EPA began the annual survey in fiscal 1986.

The government has forecast that the nation’s economy will grow 1 percent in fiscal 2000, which began April 1.

The EPA in January surveyed 2,190 companies listed on the Tokyo Stock Exchange, the Osaka Securities Exchange and the Nagoya Stock Exchange, of which 1,348 firms responded. Financial service companies and insurance companies are excluded from the annual survey.

Asked to forecast Japan’s economic growth for the three years from fiscal 2000, the companies predicted an average 1.3 percent growth per year, and as for the next five years, they said growth would average 1.5 percent a year.

These projections are better than those of last year, but the levels of this year’s forecasts remain low, an agency official said.

“Companies are still cautious about the outlook for the economy,” the official said.

Firms are wary as many feel they need more time to finish cutbacks in the workforce and other assets, such as real estate and production facilities, the official said.

The survey showed that 1,097 companies, 81 percent of those responding, said they need more time to achieve an “appropriate level” in the workforce, with 59.7 percent of the respondents saying they need more than two years.

The surveyed firms project a 1.7 percent increase per year in their investment in facilities and equipment through fiscal 2002, up from an annual average of 0.3 percent projected in last year’s survey.

The official noted that this figure is higher than their three-year projection of 1.3 percent a year for economic growth, and said this shows that the companies feel bullish about their capital outlays.

Of the responding companies, 52.8 percent said their sales will increase over the next year, while 62.6 percent said their pretax profits will rise.

Export-oriented companies said the top value of the yen at which they could operate profitably would be 106.50 yen to the dollar, compared with 112.70 yen in last year’s survey.