Major Japanese companies are growing more pessimistic about the economy due to worries over prolonged U.S.-China trade tensions and last year’s consumption tax hike, a Kyodo News survey showed Thursday.
Of 113 companies polled, including Toyota Motor Corp., NTT Docomo Inc. and Sony Corp., 19 percent said Japan’s growth was gradually expanding, down from 23 percent in last summer’s survey, while none said the world’s third-largest economy was growing strongly.
Some 61 percent said the economy was flat and 19 percent saw it as in gradual recession. Of them, 26 percent picked a “slowdown in trade due to the spread of protectionism” as the underlying cause and 14 percent chose an “economic slowdown in China,” according to the survey conducted between early November and early December.
China and the United States reached a “phase-one” deal last month after the tit-for-tat tariffs dispute played out for more than a year. But many analysts remain cautious about whether the relationship between the world’s top two economies’ will improve.
About 32 percent picked “dampening of consumption” partly due to the tax hike from 8 percent to 10 percent last October in Japan as a reason why they see the economy likely to remain flat or gradually recede.
For 2020 alone, 43 percent of the companies said they expect the economy to expand, helped by Tokyo’s hosting of the Olympics and Paralympics in the summer.
But the view that the economy will chill when the sports extravaganza wraps up remained strong among the companies, the survey showed.
Despite the impact on the economy, 63 percent of the polled companies said the consumption tax hike was an “appropriate decision” by the government for fiscal rehabilitation, compared with 2 percent opposed to the increase.
On the Japan-South Korea relationship, which worsened to its lowest level in decades in 2019 due to differences over wartime labor compensation and trade issues, 42 percent urged the government to “restore the situation to normal from a broad perspective.”
The standoff has led to widespread boycotting of Japanese products in South Korea.
In late December, Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae In agreed in their first summit in 15 months to continue dialogue to bridge the existing gaps, in a fresh sign that strained ties may begin to thaw.
The survey also showed that 40 percent of the companies are reviewing their business continuity plans following a series of devastating natural disasters in Japan.
Deadly Typhoon Hagibis destroyed roads, river embankments and homes in October, and caused some manufacturers to close plants, affecting the procurement and transport of parts in Japan’s supply chain.
With regard to the Japanese government’s consideration of strengthening regulations on information technology giants, such as Amazon.com Inc., Apple Inc., Facebook Inc. and Google LLC, only 7 percent backed the idea.
Some 29 percent said they hope the government will have a “careful” discussion as tighter regulations could risk hurting technological innovations.
The digital behemoths have come under scrutiny in a number of countries for allegedly abusing their dominant positions to take advantage of smaller firms that do business on their platforms.
The government is set to propose a bill next year aimed at securing transparency in contracts with such digital giants.