More than half of major Japanese companies surveyed expect the economy to remain flat through the end of the year, citing such concerns as sluggish consumer spending, a stronger yen and the effects of Britain’s decision to leave the European Union, a Kyodo News survey has shown.
Of the 108 companies surveyed in mid- to late July, including Toyota Motor Corp. and Panasonic Corp., 60 firms, or 56 percent, said they think the economy will stay flat through the end of this year and nine projected a moderate slowdown, while 35 expected a moderate expansion.
The survey results indicate Japanese companies are taking a cautious approach on their future business.
The the findings also show the yen appreciated against the U.S. dollar to a level many companies had not expected, putting pressure on their earnings.
In the survey, 39 firms, or the largest proportion at 36 percent, said they believe the dollar will average somewhere between ¥110 to ¥115 in fiscal 2016 ending in March, while 18 firms expect the exchange rate to range between ¥105 to ¥110. The dollar was trading around ¥102 on Friday.
Four firms expect the exchange rate to range between ¥100 to ¥105 and none expected the dollar to average below ¥100.
Regarding the effects of Britain’s decision to leave the European Union, 29 firms, or 27 percent, expected adverse effects on their earnings while 90 companies said they have businesses in Britain or other European countries.
On the current state of the economy, 89 companies said they view it as being “flat,” while 12 firms saw it gradually expanding and seven firms said it is gradually slowing.
On hiring foreign workers, 26 companies said Japan should employ more foreigners while limiting them to those with high professional skills, while 13 companies said unskilled labor should also be accepted.
Meanwhile, 92 firms, the vast majority of those who took part in the survey, said they have been promoting women’s empowerment and they plan to keep doing so, while 67 companies said they are taking the same approach toward the elderly.
On what economic steps they want the Abe administration to introduce, 44 companies, or 41 percent, said they hope the government will carry out deregulation, 43 firms called for reform of the social security system and fiscal rehabilitation, and 36 firms sought measures to stabilize the currency market
In the latest bid to pull Japan out of deflation, Prime Minister Shinzo Abe’s Cabinet approved an economic stimulus package worth ¥28.1 trillion ($274 billion) earlier this month.
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