Ja­panese business con­fi­dence re­bounds; first time in a year A slid­ing yen boosts profit hopes

Kuwait Times - - BUSINESS -

Con­fi­dence among some of Ja­pan’s big­gest firms has re­bounded for the first time in over a year, a key cen­tral bank sur­vey showed yes­ter­day, as a slid­ing yen boosts profit hopes. The Bank of Ja­pan’s Tankan re­port-a quar­terly sur­vey of more than 10,000 com­pa­nies that is the broad­est in­di­ca­tor of how Ja­pan Inc is far­ing-showed a read­ing of 10 among ma­jor man­u­fac­tur­ers, rising from six in its pre­vi­ous re­port. A positive figure means com­pa­nies are on av­er­age optimistic. The October-De­cem­ber read­ing marked the first on-quar­ter im­prove­ment since last year’s April-June re­port.

Con­fi­dence among small- and mid-sized firms also strength­ened in the lat­est read­ing, while com­pa­nies also said they planned to boost capital spend­ing, al­though the pace was weak. The re­port of­fered some good news for Ja­pan’s sput­ter­ing eco­nomic re­cov­ery. Last week, the gov­ern­ment down­graded its es­ti­mate for third-quar­ter growth to 0.3 per­cent, from an ini­tial 0.5 per­cent read­ing. The BoJ’s re­port is likely to take some pres­sure off the cen­tral bank to launch more eas­ing mea­sures af­ter its last meet­ing of the year next week. Still, firms ex­pect the next three months to be less rosy.

“This sug­gests com­pa­nies re­mained cau­tious, per­haps re­flect­ing un­cer­tainty around the out­look for pol­icy and ex­change rates un­der the new US ad­min­is­tra­tion, among other fac­tors,” Bar­clays said in a re­search note. “If the yen re­mains weak, how­ever, there could still be some up­side.” Wed­nes­day’s re­port for the fi­nal quar­ter of the year in­cludes com­pany polling fol­low­ing Don­ald Trump’s vic­tory in the US presidential elec­tion. The dol­lar has soared since the surprise Novem­ber elec­tion re­sult, on hopes for a big gov­ern­ment spend­ing pack­age and higher in­ter­est rates un­der the Trump ad­min­is­tra­tion.

The yen is now trad­ing at multi-month lows against the green­back, which makes Ja­panese prod­ucts cheaper abroad and in­flates the value of repa­tri­ated prof­its. “It seems that Ja­panese man­u­fac­tur­ers are get­ting a big break from the re­cent yen de­pre­ci­a­tion,” said Takuji Okubo, chief econ­o­mist at Ja­pan Macro Ad­vi­sors. “But do they have a good rea­son to think it the yen’s slide will con­tinue? I don’t think so. It all de­pends on how Trump ex­e­cutes his eco­nomic pol­icy.”

Ja­pan’s econ­omy con­tracted in the last three months of 2015, be­fore bounc­ing back this year, al­though the re­cov­ery has been wob­bly. Of­fi­cials are un­der in­tense pres­sure to de­liver a boost to growth as Prime Min­is­ter Shinzo Abe’s spend-for­growth poli­cies ap­pear to fal­ter. He launched his “Abe­nomics” growth blitz in early 2013 - a mix of mas­sive mon­e­tary eas­ing, gov­ern­ment spend­ing and red-tape slash­ing. But promised re­forms to the highly reg­u­lated econ­omy have been slow in com­ing.

Tokyo in July an­nounced a whop­ping 28-tril­lion-yen ($243-bil­lion) pack­age aimed at kick­start­ing growth, af­ter Bri­tain’s June vote to quit the Euro­pean Union sent fi­nan­cial mar­kets into a tail­spin and ini­tially sparked a rally of the safe-haven yen. The cur­rency’s down­trend has since been re­versed. The cheaper yen could help shore up Ja­pan’s inflation rate, which re­mains way be­low the Bank of Ja­pan’s of­fi­cial 2.0 per­cent tar­get. The BoJ last month pushed back the time­line for hit­ting the tar­get. It now ex­pects to hit the goal by March 2019 - four years later than its orig­i­nal tar­get and the lat­est in a string of de­lays. —AFP

TOKYO: Pedes­tri­ans walk along a street in the Ginza shop­ping district in Tokyo yes­ter­day. Con­fi­dence among some of Ja­pan’s big­gest firms has re­bounded for the first time in over a year, a key cen­tral bank sur­vey showed yes­ter­day, as a slid­ing yen boosts profit hopes. —AFP

HUAXIAN: Photo shows a tex­tile worker at a fac­tory in Huaxian County, in China’s north­ern He­nan Prov­ince. —AFP

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