Double-dip recession forecast by big firms

Kyodo News

Nearly 40 percent of major companies in a survey said that the economy is “highly likely” or “likely” to fall into a double-dip recession, according to results compiled Saturday.

The survey of 109 leading companies, conducted from late November through mid-December, found that 40 firms, or 37 percent of those surveyed, anticipate a further downturn in economic activity. The survey covered companies including Canon Inc., Nippon Steel Corp., Nippon Oil Corp., Sony Corp., Toyota Motor Corp. and Mitsubishi UFJ Financial Group Inc.

In reply to a multiple response question about their reasons for the pessimistic outlook, 26 of the 40 companies attributed it to the yen’s appreciation. In addition, 24 firms replied that the effects of stimulus measures adopted by the government will wane, while 23 referred to deepening deflation.

Asked when they expect a double-dip recession to strike, 21 companies responded between January and March, while 16 replied between April and June.

However, 56 of the 109 companies, or about 51 percent, said they expect the domestic economy to stage a full-scale rally in the second half of 2010.

With regard to the economic policy of the Democratic Party of Japan-led government, 48 companies want to see a clear road map toward medium and long-term growth.

Among other survey findings, 20 companies are planning to cut back on capital spending in fiscal 2010, while 33 firms are considering workforce reductions.