Nearly 76% of Business Leaders View Japan’s Economy as ‘Growing’

A recent survey conducted by Asahi Shimbun has shown a positive shift in business sentiment among Japan’s corporate leaders. Of the 100 major companies surveyed nationwide, 76% perceive the domestic economy as either “expanding” or “gradually expanding.” This marks a significant increase from the previous survey in November, where fewer companies shared this optimistic outlook.

The change in perspective is largely attributed to the COVID-19 virus being downgraded to the equivalent of seasonal flu, reducing its “scare” factor and subsequently boosting economic activity and personal consumption. However, concerns about labor shortages and potential slowdowns in overseas economies impacting Japan still linger.

The survey, conducted from July 3 to 14, had 75 companies indicating that the domestic economy was “gradually expanding,” while one company stated it was “expanding.” A total of 22 companies considered the economy as “at a standstill,” a figure which has halved since the previous survey.

When asked to select up to two reasons for their assessment, the majority of companies (71) cited “personal consumption.” Looking over the next three months, 74 companies anticipated a “gradual recovery” in personal consumption, a rise from the 44 companies in the previous survey.

Taro Fujie, president of Ajinomoto Co., noted an improved consumer mindset towards spending, indicating the beginning of a cycle where wage increases align with appropriate price hikes. Chiharu Fujioka, managing officer of Mitsui Fudosan Co., highlighted that hotel occupancy rates exceeded 80%, with daily rates surpassing those from before the pandemic in 2019.

The easing of pandemic-related restrictions on social activities, along with the influx of foreign visitors due to lifted entry curbs, have positively impacted the economy. Tatsuya Yoshimoto, president of J. Front Retailing Co., indicated growth in customer numbers and sales at department stores and shopping centers.

Out of the surveyed companies, 43 cited “capital investment” as a reason for their assessment, with 51 planning to increase their domestic capital investment in the current fiscal year.

Despite these positive indicators, some senior officials who view the domestic economy as “at a standstill” expressed concerns about labor shortages and the slowdown of overseas economies. Nobuaki Nara, president of Tokyo Steel Manufacturing Co., mentioned project delays due to a lack of manpower despite strong demand for construction.

As for the global economy, 51 companies took a cautious stance, considering it as “at a standstill.” Takahiro Mori, vice president of Nippon Steel Corp., pointed out potential risks such as central banks’ tightening monetary policy in the United States and Europe, and a downturn in the Chinese economy.