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Business sentiment among major companies in Japan has worsened, with nearly 80 percent viewing the domestic economy as “at a standstill,” an Asahi Shimbun survey shows.
Seventy-eight of 100 leading companies blamed the economic stagnation mainly on weak consumer spending and lower corporate earnings amid the rising value of the yen and the global slowdown.
The figure marked an increase of 20 companies from the previous survey last November and the largest since the second Abe administration started in September 2014.
Top executives of 100 companies are, in principle, interviewed for the biannual survey, the latest of which was conducted between May 30 and June 10.
The most cited reason among the 78 companies which deemed the Japanese economy to be “at a standstill” is “consumer spending” at 65 companies, followed by “corporate earnings” at 27 companies. The respondents were allowed to choose one or two reasons in the survey.
“The yen’s depreciation, which had boosted corporate performance in Japan until last year, has halted, so the earnings power is declining,” said Taku Oshima, president of NGK Insulators Ltd.
“As many companies have yet to return their profits to investors, consumer spending remains stagnant,” Oshima added.
Sixteen of the 100 companies viewed the Japanese economy as “moderately expanding,” substantially down from 92 companies a year ago.
On the other hand, the number of companies that viewed the economy as “at a standstill” increased sharply from the four a year ago.
Although not a single company viewed the economy as “moderately receding” in the previous survey, six companies did so in the latest set of interviews.
The results show dampening business sentiment among companies as the effects of a weaker yen and high stock prices triggered by the Bank of Japan’s massive monetary easing, the first of the so-called three arrows of the prime minister's "Abenomics" policy, are waning.
(THE ASAHI SHIMBUN)
