42% of major companies believe that rising prices will slow the Japanese economy

About 42% of Japan’s largest companies expect the domestic economy to slow over the next 12 months as they struggle to cope with higher commodity prices and a weaker yen, down from just 5% a year ago. A survey by Kyodo News revealed that there was an increase from .

A survey of 114 companies, including Toyota Motor Corp. and SoftBank Group Corp., found that Japan’s blue-chip companies are increasingly pessimistic about Japan’s economic outlook, up from 12% at the start of the year.

On the other hand, those who think the Japanese economy will expand have fallen from 90% a year ago to 55%, and have fallen to 84% this year.

A file photo taken in November 2021 shows storage tanks for crude oil and petroleum products in Chiba Prefecture, eastern Japan. (Kyodo)

When multiple responses were allowed, 83% who expect the economy to slow down cited a negative impact from rising commodity prices, and 58% expect slower growth or lower consumer spending.

About 56% said the yen’s depreciation against the US dollar and other major currencies would have a negative impact on the economy.

Rising global demand is pushing oil and commodity prices to historic highs as countries look to reopen their economies, while Russia’s invasion of Ukraine further exacerbates supply chain constraints. I’m here.

Moreover, the Japanese currency has been in free fall against the US dollar in recent months, hitting a 24-year high last month in the 139 zone amid contrasting monetary policy approaches between Japan and the US.

The US Federal Reserve has pushed aggressive interest rate hikes to combat 40 years of high inflation with a risk of recession, but the Bank of Japan has maintained ultra-accommodative monetary policy.

A joint survey of leading companies in each sector, conducted in mid- to late-July, found that 32% of companies expect economic growth to remain flat, while 10% expect a moderate contraction. rice field.

About 53% of the companies surveyed expect moderate growth, and 2% expect solid growth. No one believed the economy would go into recession.

Of the multiple respondents predicting growth, 85% expect consumer spending to pick up and 77% expect normalization from the coronavirus pandemic.

Some companies say the Bank of Japan’s hardline stance to maintain ultra-accommodative monetary policy has caused the yen to weaken, pushing up import prices, but 37% nonetheless want it to continue. I think there is.

30% of the respondents said they wanted the price to stay around 110 to 120 yen.

The survey also found that 39% of businesses believe coronavirus should be treated in a similar way to seasonal flu.

Japan’s daily COVID-19 cases hit a record high in recent weeks, but the government has not imposed restrictions on people’s movements, but it needs to speed up its review of measures to combat the disease. There are increasing voices saying

When asked about the best way to address potential power shortages, more than half support the need to save electricity, followed by increased deployment of solar and wind power, and 39% support restarting nuclear reactors. I know what I did.

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