Economy ‘at standstill’ for big firms

TOKYO (The Japan News/ANN) - About 80 percent of major companies believe the current domestic economy is “at a standstill,” according to a Yomiuri Shimbun survey of business sentiment.

Conducted on 117 firms, the survey reveals that many are now feeling an economic slowdown, with most citing weak consumer spending.

Regarding the possible British exit from the European Union, which is a major focus of the global economy, 25 out of 75 companies that do business in Britain expressed concern that it would have an effect on their business.

Regarding current economic conditions, 89 companies said the domestic economy was “at a standstill,” while seven deemed it to be “moderately deteriorating.” Twenty-one companies said it was “moderately recovering.”

Asked why they viewed the domestic economy as being at a standstill or moderately deteriorating, 85 companies cited “weak consumer spending” as the most common reason. Multiple answers were allowed. 

This was followed by 57 companies who cited the “slowdown in China and other emerging economies,” and 31 companies who said the “deteriorating business performance due to the yen’s appreciation.”

Many companies expressed concern that consumer spending, which accounts for 60 per cent of the nation’s gross domestic product, has been sluggish since the consumption tax rate was raised in April 2014.

The latest survey was conducted from June 3 to 15. In the previous survey in September and October last year, less than 60 per cent of companies viewed the domestic economy as being “at a standstill,” and more than 40 per cent said it was “moderately recovering.” In comparison, the latest survey illustrates an increased sense of stagnation among companies.

Regarding the outlook for the end of this year, 57 companies said the economy would “recover moderately,” while 52 said it would be “at a standstill.” Two companies forecast that the economy would “deteriorate moderately.”

When the 57 companies that expected a moderate economic rebound were asked why, again with multiple answers allowed, most cited the “recovery in consumer spending,” at 37 companies. This was followed by 30 companies who cited an “increase in capital investment,” and 17 companies who cited an “improved employment situation and rising wages.”

There were 54 companies that forecast the domestic economy “coming to a standstill” or “deteriorating,” and 44 of those cited “sluggish growth in consumer spending” as a negative factor.

There are significant differences among companies regarding the prospects for consumption, which is affecting overall business sentiment.

Regarding the economic outlook, the major focus is whether Britain chooses to leave the EU in a referendum to be held Thursday.

Among companies expressing concern over the possible British exit from the EU, 18 cited the “possibility that business systems and regulations based on EU rules may change” as a specific reason. Fifteen referred to the “possibility that entry and departure, or imports and exports, between Britain and EU member nations may not go smoothly.”

There appears to be increasing concern among companies that rules covering trade and investment between Britain and the EU could be reviewed. 


No photos has been attached.