Kyodo News surveyed 111 leading companies on their economic outlook. Only 51% expected the economy to remain on an expansionary trend, down 19 percentage points from January.
A Kyodo News survey of 111 companies on the outlook for Japan's domestic economy found that 51% expected it to remain on an expansionary trend, down sharply from 70% in January. The share expecting the economy to remain flat rose to 38%, from 25%. Rising prices have led to increasingly cautious views of the economic outlook.
When asked to identify multiple reasons for their concerns, the negative impact of rising prices ranked first at 54%, followed by sluggish personal consumption at 50% and soaring energy prices at 48%, highlighting the growing burden of costs. No respondents expected the economy to contract.
Meanwhile, the reasons cited for expecting moderate expansion included a recovery in capital investment at 81%, a recovery in personal consumption at 77% and the positive impact of wage increases at 68%. No company expected stronger expansion.
The survey was conducted from early to late July and does not reflect the impact of the earthquake or yen-buying interventions by Japan and the United States.