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Some 72% of major Japanese companies expect the economy to expand at a moderate pace in 2021 amid hopes that the fallout from the coronavirus pandemic will subside, a Kyodo News survey showed Saturday.

Despite the positive forecast for the world’s third-largest economy, more than a quarter of the 109 firms in the survey, or 29%, said they are not sure when their sales will return to pre-pandemic levels, and 13% expect any recovery to materialize in 2023 or later, indicating that corporate Japan remains cautious about business conditions.

A sense of caution prevailed toward the end of 2020 as Japan was hit by a resurgence of coronavirus cases. The third wave of infections came as the Japanese economy was gradually rebounding from its worst contraction in the April-June quarter when Japan was placed under a state of emergency over the virus.

Prime Minister Yoshihide Suga had sought to balance supporting the economy and tackling the health crisis but his handling of the pandemic has been called into question.

The survey found 72% see moderate growth, followed by 17% that expect economic conditions to remain unchanged. Around 2% said the economy will expand, while another 2% project a moderate contraction, according to the survey.

With multiple answers allowed, 64% of the firms expecting economic growth in the year ahead said the impact of the pandemic will stabilize and 47% cited recovering private consumption. Some 32% picked a recovery in overseas economies and 14% pinned hopes on the effects of economic stimulus by the government.

Economists say uncertainty over the economic outlook will persist with vaccines and treatment drugs for COVID-19 seen as critical, after virus outbreaks led to lockdowns in some countries and depressed economic activity and travel. The Japanese government projects a 4.0% expansion in real gross domestic product in fiscal 2021 from a year ago.

The Kyodo News survey showed an increased shift toward digitalization to cope with the spread of the virus as all companies introduced teleworking and 99% said they promoted online meetings.

Digitalization is one of the priority areas for Suga, who has seen his support ratings plunge in recent weeks after the honeymoon period of his tenure ended.

Among the prime minister’s policy items, 29% said they support the creation of a digital agency that will be tasked with digitalizing administrative work, followed by 28% that are in favor of promoting regulatory reforms.

Some 20% backed the government’s efforts to fight global warming, while only 1% were in support of the administration’s move to lower mobile phone fees that it sees as higher than in other countries. Major mobile carriers have yielded to government pressure and announced cheaper options in what is shaping up to be a price war.

Suga has promised to expand support for often costly infertility treatment as Japan faces a declining birth rate. About a third, or 33%, do not have a support system for employees who receive infertility treatment, while 64% said they already have one in place or are considering creating it, according to the survey.

Ahead of the launch of an administration by U.S President-elect Joe Biden in late January, 35% expect he will promote free trade and 18% said the Democrat would seek to accelerate economic growth.

Kyodo News conducted the survey between mid-November and early December, targeting major companies in each sector. The 109 firms include Toyota Motor Corp., Sony Corp., Seven & I Holdings Co. and ANA Holdings Inc.

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