Poll: Japanese firms’ 2023 economic outlook bleak

TOKYO: Major Japanese companies have become more pessimistic about the economy amid rising costs and a weaker yen, according to a Kyodo News survey.

The survey of 117 companies found that just over half, or 56%, expect economic growth this year. That was down sharply from 84% a year earlier, the survey released on Monday said.

The percentage of companies expecting growth was at its second lowest in 10 years for the annual survey, and companies also expressed concerns about slowdowns in the United States and China in 2023.

The war in Ukraine has pushed prices for oil and other commodities higher while at the same time the yen has weakened against the US dollar, raising risks for the world’s third-largest economy.

The bleak outlook also reflects worries about a possible global recession as central banks in the United States and other major economies raise interest rates to counter inflation.

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The dollar reached around 150 yen at its peak last year, compared to 115 yen at the start of the year. On Tuesday, it was trading at around 130 yen.

Only 3% of businesses surveyed said a weaker yen was positive for them, and about a third said it was a problem because it increased manufacturing input and energy costs, which hurt to their results.

Japan’s economy contracted at an annual rate of 0.8% from July to September as precautions against the coronavirus pandemic eased at the end of the summer, allowing normal business activity and trips to resume. Exports rose 2.1% year-on-year. Growth in the last fiscal year, which ended in March, was 2.5%.

Toyota Motor Corp. was among the companies expecting a relatively good year. Like other major export manufacturers, it benefits from a cheaper yen when it repatriates profits made abroad.

Energy, telecommunications and technology company SoftBank Group Corp. also predicted an improvement in the coming months, according to the survey conducted from late November to mid-December.

Consumer spending has rebounded as Japan ended restrictions on business activities to fight coronavirus outbreaks, even as the number of cases has soared in recent weeks. Most companies forecasting a positive outlook for 2023 cited this as the main reason for their optimism.

About a third of companies surveyed said they expected no major change this year, while seven expected a moderate contraction.

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