Firms expect real growth of 1.3%

Kyodo

Companies forecast that the economy will expand 1.3 percent in inflation-adjusted terms in fiscal 2014, despite growing concern that the consumption tax hike next month may hurt consumer spending and investment, a government survey showed Friday.

According to the survey released by the Cabinet Office, the companies also projected that the economy will grow 1.7 percent in nominal terms, or unadjusted for price changes, during the year starting April 1.

It is the first time since 2003 that the corporate sector has predicted that the rate of nominal gross domestic product growth will surpass that of real growth in the following fiscal year.

The government began asking about the nominal GDP outlook in fiscal 2003.

As the economy is expected to recover from a possible downturn in the wake of the sales tax hike to 8 percent, all sectors said they are likely to boost capital spending by 4.2 percent over the three years through fiscal 2016 while increasing employment by 1.7 percent.

Companies also forecast that the dollar will rise to ¥105.7 around January 2015, up from ¥88.4 projected in the previous year’s survey.

The Cabinet Office surveyed 2,395 companies listed on the first and second sections of stock exchanges in Tokyo and Nagoya, of which 867, or 36.2 percent, provided valid responses.

In another report released Friday, the government revised upward its economic assessments for eight of Japan’s 11 regions from the previous evaluation in November, amid robust sales of expensive items such as cars ahead of the sales tax hike.