Around 70 percent of major Japanese companies expect the country's economy to expand over the next year, down from some 80 percent a year ago, due to concerns about a weak yen and inflation affecting personal consumption, a Kyodo News survey showed Sunday.
A total of 72 percent said the economy is expected to expand solidly or grow moderately, with many citing a recovery of consumer spending, according to the survey of 111 firms including Toyota Motor Corp. and cosmetics maker Shiseido Co.
While the percentage was lower than the 82 percent projecting growth last summer, the latest survey showed 23 percent expect the economy to stay flat or slow down moderately, up 8 percentage points, showing some companies are becoming more cautious.
With multiple answers allowed, 84 percent of those predicting economic expansion cited recovery in consumer spending as the reason behind their response, followed by recovery in capital spending at 79 percent and increased spending by foreign visitors at 53 percent.
Among those that projected the economy to remain flat, 64 percent cited a slump in consumer spending, followed by the adverse impact of a weak yen and rising prices at 48 percent.
The survey, covering leading companies in each sector, also showed 70 percent of the firms found their earnings are on a growing trend.
While 42 percent of the companies said they plan to raise the prices of their products and services over the next year, 76 percent said they were undecided over their wage policy for the spring wage negotiations for 2025.
Asked about policies that need to be pursued by the government of Prime Minister Fumio Kishida, 35 percent said addressing the low birthrate and aging population, while 34 percent cited measures to tackle a weakening yen and soaring prices.
Regarding the country or region where companies intend to focus their operations, capital investment and spending on research and development while taking into consideration economic security, 58 percent cited Japan, followed by North America at 35 percent and Southeast Asia at 32 percent.
Meanwhile, only 6 percent said they want to place an emphasis on China.
Of the respondents, 10 percent have plans to expand operations in China while 9 percent are looking to scale back their businesses and 40 percent said they will maintain their current operations in the country.
The survey was conducted from mid-July to early August. The results do not reflect recent turbulent moves in the stock and foreign exchange markets caused by the Bank of Japan's additional interest rate hike and growing concerns over the U.S. economy.
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