Weak Ja­pan con­fi­dence re­veals re­cov­ery doubts

The China Post - - INTERNATIONAL - BY HIROSHI HIYAMA

Doubts about a re­bound in Ja­pan’s econ­omy are rip­pling through board­rooms across the coun­try, a key cen­tral bank sur­vey sug­gested Wed­nes­day, as ef­forts to re­vive growth fal­ter.

The Bank of Ja­pan’s closely watched Tankan re­port showed con­fi­dence among big man­u­fac­tur­ers stood at plus 12 in March, flat from the pre­vi­ous sur­vey and miss­ing ex­pec­ta­tions that the level would come in at 14.

While sen­ti­ment among non­man­u­fac­tur­ers was more up­beat, they pared profit ex­pec­ta­tions while Ja­pan’s in­creas­ingly pes­simistic cor­po­rate ti­tans trim their spend­ing plans.

The sur­vey

of more

than 10,000 com­pa­nies — which shows the dif­fer­ence be­tween the per­cent­age of firms that are op­ti­mistic and those that see con­di­tions as un­fa­vor­able — is the most com­pre­hen­sive in­di­ca­tor of how Ja­pan Inc. is faring.

Tokyo’s bench­mark Nikkei 225 in­dex fell 0.89 per­cent morn­ing trade as in­vestors re­acted to the down­beat re­port.

The tepid sur­vey comes days af­ter sep­a­rate data showed out­put from Ja­panese fac­to­ries shrank by a worse-than-ex­pected 3.4 per­cent in Fe­bru­ary, while in­fla­tion stalled as a key mea­sure of prices was flat for the first time in nearly two years.

The gloomy data high­light the chal­lenges fac­ing Prime Min­is­ter Shinzo Abe’s two-year-old bid to con­quer de­fla­tion and re­vive the long-slug­gish econ­omy, dubbed Abe­nomics — and they stand in stark con­trast to Tokyo’s rel­a­tively rosy as­sess­ment of Ja­pan’s prospects.

‘Mo­ment of truth’

While a weak yen has lifted prof­its among Ja­panese ex­porters, it also jacks up com­pa­nies’ im­port costs and an­a­lysts have warned that the benefits of a cheap cur­rency were fad­ing as firms get set to re­port their quar­terly re­sults later this month.

“A stall in forex rates and a bot­tom­ing out of oil prices would slam the brakes on firms’ profit mo­men­tum,” the SMBC Nikko re­port said.

“Abe­nomics could face its mo­ment of truth in the sec­ond half of this year.”

AFP

Lufthansa CEO Carsten Spohr, left, and Ger­man­wings CEO Thomas Winkel­mann lay a wreath near a stele in mem­ory of the vic­tims of the Ger­man­wings Air­bus A320 crash, in the small vil­lage of Le Ver­net, French Alps, on Wed­nes­day, April 1. French Pres­i­dent Fran­cois Hol­lande said on Tues­day that it would soon be pos­si­ble to iden­tify the vic­tims of the Ger­man­wings plane dis­as­ter, as in­sur­ers said hun­dreds of mil­lions of U.S. dol­lars were be­ing set aside to cover com­pen­sa­tion for their fam­i­lies.

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