January 17, 2023
According to a Kyodo News study released, just about half of big Japanese corporations anticipate economic growth in 2023 given the country’s weak yen and rising costs of raw materials and natural resources brought on by the conflict in Ukraine.
65 companies, or 56%, in the survey of 117 businesses, including Toyota Motor Corp. and SoftBank Group Corp., predict strong expansion or moderate growth in the third-largest economy in the world in the year to come, a steep decline from 84% a year earlier.
The survey’s overall growth predicting rate was at its second-lowest level in ten years, and the responding businesses were wary about slowdowns in the US and China in 2023.
In the survey, which was conducted between late November and mid-December, 40 businesses, or 34%, stated that they thought the economy would remain flat, while seven others expected a moderate downturn. No one anticipated a recession to hit the economy.
Multiple responses were permitted, and an overwhelming 92% of the businesses anticipating growth cited a rebound in consumer spending following a decline brought on by the coronavirus outbreak.
70% of the enterprises that responded that they did not anticipate growth cited increases in the cost of raw materials and natural resources, and 45% predicted that consumer consumption would be subdued. Slowdowns in the US and China, respectively, were mentioned by 40% of the companies.
Regarding how businesses perceived the sharp decline in the value of the yen relative to the dollar, 43% thought it would have a good effect on earnings, compared to 23% who thought it would have a negative effect.
A weaker yen is advantageous for exporters since it increases their overseas profits upon repatriation.
However, the results were flipped when asked about the effect of the weak yen on the Japanese economy, with 32% believing it is bad and only 3% perceiving it as favorable. Many businesses opted not to respond to the inquiry.
The nation’s annual traditional spring wage discussions between management and workers are expected to draw extra attention because consumers are being hammered by increases in the cost of daily essentials, including food and energy, as a result of rising material costs and the depreciating yen.
While 48% of the companies stated they were unsure at the time of the polling, 36% of them said they planned to or were contemplating raising salaries.
According to the study, over half of the businesses support policies to promote renewable energy sources, encourage digital transformation, and reduce carbon dioxide emissions. These policies are all part of Prime Minister Fumio Kishida’s policy agenda.
Decarbonization and digitalization are urgent concerns that businesses must address, yet they also call for substantial capital expenditures and long-term investments in R&D.
The majority of non-manufacturing firms, including those in the retail and service industries, demanded that the government take action to combat dropping birthrates, promote child rearing, and cope with growing prices for basic necessities.
Source: Japantimes
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