Some 88 percent of major Japanese companies surveyed expect the economy to grow by the end of 2015, and nearly half of them plan to boost capital spending in the business year through March, a Kyodo News survey showed Saturday.
The results of the survey indicate domestic firms are generally optimistic about the country’s economic prospects, despite weak consumer spending and increasing uncertainties about China.
Of the 108 companies surveyed between late July and mid-August, including Toyota Motor Corp. and Sony Corp., 95 firms said they think the economy will expand by the end of this year, of which 89 expect moderate growth. Seven firms said they expect growth to be flat, while only one projected a moderate slowdown.
The Japanese economy shrank an annualized real 1.6 percent in the April-June period due to a fall in consumption and sluggish exports, boding ill for Prime Minister Shinzo Abe’s push to lift the economy out of deflation.
On the current state of the economy, 83 percent of the companies polled said it is expanding moderately, with 16 percent viewing it as being “flat.” None said the economy is slowing down.
Asked why they think the economy is expanding, 54 firms cited recovering capital spending, while 41 firms said consumer spending is rebounding. Some 18 companies named firm stock prices as a reason.
The survey also found 53 companies willing to increase capital spending in the current fiscal year, of which 30 plan to do so mainly in Japan, 13 both at home and abroad, and 10 in foreign countries. Just 10 firms said they plan to reduce capital investment.
Abe has pledged to make sure regional economies can feel the benefits of his “Abenomics” policy package that sent domestic stocks to an 18-year high earlier this year through an ultraeasy monetary policy and the weakening of the yen.
Major companies, especially exporters in the auto, electronics and machinery industries, have posted robust earnings, reaping greater windfalls from the weaker yen that inflates their overseas profits when repatriated.
But Abe’s economic policies have also faced strong criticism that smaller and regional companies have been left out.
Despite the government’s policy of encouraging firms to move their headquarters and overseas production bases to regional areas, 76 percent said they have no plans to do so.
Although the consumption tax hike in April last year remains a drag on consumer sentiment, 33 percent of the companies said consumer spending has already recovered, followed by 21 percent projecting a rebound by September, and 13 percent by the end of December. Some 19 percent said it is too early to make a judgment.
When asked whether Japan should cut taxes on daily necessities when the sales tax is raised again to 10 percent in April 2017, 37 percent expressed opposition to the idea, saying it would be difficult to decide on which items should be chosen.
In a multiple-choice question on what steps they want the Abe administration to introduce, a total of 48 firms said they want the government to implement corporate tax cuts, followed by 39 calling for bold deregulation, and 27 for promotion of economic partnerships such as the Trans-Pacific Partnership free trade initiative.