Execs polled don’t expect recovery before next fall

A majority of top executives polled at 100 major Japanese firms do not expect the Japanese economy to get on a firm recovery track until next fall or later, according to a Kyodo News survey conducted earlier this month.

Fifty-six out of the 100 executives surveyed said they do not expect the economy to start recovering in earnest before the second half of fiscal 2003, which begins next April.

Of these, 33 said they do not think the economy will get on the recovery path until fiscal 2004 or later.

The survey showed that 28 executives expect the economy to begin recovering in the first six months of fiscal 2003.

Seventy-seven said the economy is now “stalled.”

The results suggest that top executives have a grim view of the economy, and that they feel the recent stock market falls are putting a damper on the prospects for a short-term economic recovery.

A Kyodo survey conducted earlier this year indicated that many firms had thought the economy would likely begin a full-fledged recovery by the end of the current fiscal year.

According the latest survey, nearly 80 percent of the executives surveyed support the injection of public funds into banks to facilitate the disposal of bad loans.

Public-fund injections would be likely if banks, in the course of disposing of their bad loans, became unable to keep their capital-to-asset ratios at or above internationally required levels.

The poll found that the executives also think the government should take steps to stimulate the economy.

Concerning methods to bring about economic recovery, 59 executives said they want to see tax reform, including lower corporate tax rates, while 60, the largest group, said bad-loan disposal is necessary.

Forty executives urged tax cuts designed to promote investment and deregulation.

Only three executives considered it necessary to reform the postal services and public expressway corporations — programs favored by Prime Minister Junichiro Koizumi.

While five executives called for reforming the government’s budgetary policy, such as slashing general expenditures, 18 said the government should implement fiscal steps to prop up the economy.

Asked how the U.S. economy is likely to fare, the largest number of executives, 36, said it is likely to recover in the first half of next year. Japan’s exporters are heavily dependent on the U.S. economy.

Divergent views exist on the course of the world’s largest economy, with many executives saying that its prospects hinge largely on how the country handles its possible war on Iraq.

The 100 Japanese companies were selected on the basis of earnings and name recognition.