• Kyodo

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About 82 percent of major companies expect the Japanese economy to grow in 2018, citing a recovery in corporate capital investment and personal spending, but they are also cautious about hiking wages, according to a Kyodo News survey.

The percentage is up sharply from a similar survey a year earlier, where 58 percent of companies predicted growth, indicating businesses are increasingly optimistic about domestic economic prospects.

Of 109 companies surveyed between late November and early December, 89, including Toyota Motor Corp. and Sony Corp., said they think the economy will expand this year, followed by 17 firms that said they expect growth to be flat. None projected a slowdown.

Asked why they think the economy will expand, 59 companies cited increased business spending, 45 a recovery in individual consumption, 34 expanding exports and 24 an improving U.S. economy. More than one answer was allowed.

As for the course of stock prices, 49 companies said they expect the Nikkei 225 average, which rose in 2017 for the sixth straight year, to continue to gain in 2018, versus 31 that said the index will likely be flat. No company projected a stock decline.

Regarding Prime Minister Shinzo Abe’s request for a 3 percent wage increase, Japan Inc. showed a largely unenthusiastic response. Only five companies said they support the prime minister’s request, while 61 said wage increases should be decided by each company and industry.

Asked about their wage policy for 2018, 14 companies said they will raise wages and 12 said wages will stay flat. The most common answer — undecided — was given by 72.

Most companies, 85, said their retained earnings have been increasing. But only one said it will increase wages when it has extra funds to spare, while 19 said such funds will be spent on boosting capital investment.

On what economic steps they want the Abe administration to introduce, regulatory reform was cited by the largest single group of 43 companies. Meanwhile, 51 expressed concerns about the government’s fiscal reform policy.

As for the Bank of Japan’s aggressive monetary easing, 32 companies said the central bank should continue with the monetary policy for the time being while paying attention to price moves and the economic situation, while eight said the policy should be maintained until the bank’s 2 percent inflation target is achieved.

The BOJ has postponed the time frame for meeting the inflation goal six times since Gov. Haruhiko Kuroda introduced drastic easing measures in April 2013.

The bank has been purchasing exchange-traded funds at an annual pace of about ¥6 trillion to lift the Tokyo Stock Exchange. Only one company said the BOJ should increase ETF purchases while 22 said otherwise.

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