The internal reserves of nonfinancial companies grew at a faster pace than their capital expenditures did during fiscal 2017, which ended in March, Finance Ministry data showed Monday.
The result may draw complaints from Finance Minister Taro Aso, who has expressed displeasure at the slow pace of growth in companies’ capital spending relative to the expansion of their internal reserves.
The balance of internal reserves stood at ¥446.48 trillion at the end of fiscal 2017, hitting a record high for the sixth straight year and growing 9.9 percent from a year before, thanks to strong corporate earnings reflecting an economic recovery.
Capital spending rose 5.8 percent in fiscal 2017 from the previous year to ¥45.45 trillion, a record high since comparable data became available in fiscal 2001.
The balance of internal reserves at the end of fiscal 2017 was nearly 60 percent higher than the level at the end of fiscal 2011, before Prime Minister Shinzo Abe took office in December 2012.
“Japanese companies are still holding back from increasing their capital spending while earning relatively high profits,” said Taro Saito, director of economic research at the NLI Research Institute.
Japanese companies’ recurring profit surged 11.4 percent in fiscal 2017 from the previous year to ¥83.55 trillion, the highest since fiscal 1960.