Nearly 80% of firms predict slowdown: poll

Kyodo News

Nearly 80 percent of 107 major companies expect Japan’s economy to weaken soon, although 70 percent see it expanding at the moment, a survey said Sunday.

Concern about economic trends in the United States, Europe and China, and the appreciation of the yen are among the factors being blamed for the gloomy near-term outlook in Japan, the Kyodo News survey said.

Kyodo polled top executives at 107 leading companies, including Canon Inc., Nintendo Co., Nippon Steel Corp., Nomura Holdings Inc., Mitsubishi UFJ Financial Group Inc., Sony Corp. and Toyota Motor Corp., between late July and early this month.

Among them, 74 companies said the economy is “gradually expanding” while one saw it as “expanding.”

The finding reflects a considerable improvement in business sentiment because 31 of the 109 companies who took the previous survey at the end of 2009 said the economy was “gradually expanding.”

Answering a multiple-response question about the factors underpinning the economy, 87 companies referred to growth in China and other emerging economies, while 66 cited government programs aimed at stimulating personal consumption, such as the “eco-point” system for environment-friendly products.

But 84 companies were concerned economic activity could slow in the near future, including two that voiced “grave” concern.

Asked when they expect the economy to begin winding down, 28 companies listed the October-December quarter, compared with 25 that said January-March 2011.

Among reasons for concern, several said overseas economic trends were a worry, with 47 pointing to the United States, 43 to Europe and 36 to China and other emerging economies.

Also, 44 firms fretted about the yen’s strength and 34 said stimulus measures were running out of steam.

The survey also found that 52 companies supported hiking the consumption tax rate to 10 percent or higher from 5 percent now, including 16 that favored boosting it to 15 percent.