A domestic survey of 106 major companies has found that 100 expect the economy to expand toward year-end, and that 76 do not oppose the government’s plan to complete the doubling of the sales tax to 10 percent in 2015, a poll says.
Although the economy plunged in the April-June quarter after the 3-point consumption tax hike to 8 percent on April 1, 92 of the companies polled said they believe the slump in consumer spending will dissipate by the end of the year.
The survey, conducted by Kyodo News between mid-July and early August, said Saturday that many of the firms are upbeat on the outlook for the economy but are also expecting the government to draft and execute policies that can guide Japan back toward stable growth.
Of the responding companies, none projected a slowdown at the end of the year, but 86 said the drop in spending caused by the tax hike was “expected” or “smaller than expected.” Seven felt the drop was “larger than predicted.”
Asked when consumer spending is expected to recover, 92 companies said it has already picked up or will do so by the end of the year, while one said it will recover next year and seven said they cannot tell yet.
On the second sales tax hike to 10 percent planned in October 2015, 34 companies said they would back it if economic conditions are roughly the same as they are now, while 16 support doing it regardless of the economic climate.
Twenty-six companies said the tax hike is tolerable as long as the economy continues to pick up, but two companies said they are against it.
Prime Minister Shinzo Abe’s government is to decide later this year whether to follow through on the second tax hike, based on July-September gross domestic product data and other economic indicators.
Asked what they would like to receive from the Abe government, a corporate tax cut topped all options proposed in the survey, followed by drastic regulatory easing and restoration of Japan’s fiscal health.
Meanwhile, some companies, including those in the electronics or auto industries, expressed hope that the government will consider the impact its policies may have on corporate activities and trade when dealing with China and South Korea.
“We hope attention is paid so that the economy will not be affected,” one automaker said, while a chemicals company called for improvement in Japan’s ties with its neighbors by respecting each other’s position and holding dialogue.