More than 90 out of 100 business leaders polled by Kyodo News in December are gloomy about the nation's future, saying the economy has either stalled or is deteriorating.
The survey, which questioned the presidents of 100 major companies, also found business leaders pessimistic about the likelihood of Japan escaping spiraling deflation in the foreseeable future.
Behind the downbeat assessment is a slowing U.S. economy and sluggish consumer spending in Japan, leaving many business leaders with few positive expectations for the government's recent antideflation package or tax reform programs.
The survey found that 77 presidents believe the economy has stalled, with 14 saying it is deteriorating moderately and two saying it is in recession. No firms considered the economy to be expanding outright, with only six saying the economy is expanding moderately.
Eighty-one presidents expect the economy to grow between 0 percent and 1 percent in real terms in fiscal 2003, which begins in April, while 14 expect the economy to contract.
Twenty-six said Japan will be unable to shake off its deflation problems for several more years and 16 said they have no idea of an exact time. Forty-five said deflation will not be overcome until fiscal 2004 or later.
Asked to identify the two most worrying problems facing the country, 39 cited another possible recession in the U.S., 38 said sluggish Japanese consumer spending, 31 brought up instability in the financial system and the bad-debt problem, and 28 referred to prolonged deflation.
Many urged the government to implement large-scale tax cuts, such as on corporate taxes, accelerate the disposal of bad loans, and introduce tax credits for capital investment and research and development spending.
The majority of the presidents forecast the 225-issue Nikkei stock average will trade slightly above 9,000 and the dollar will be close to 120 yen around the March 31 end of the fiscal year.