Major Japanese companies expect GDP to expand

About 84% of major companies in Japan expect the country’s economy to grow in 2022, driven by recovering personal consumption amid hopes that the coronavirus pandemic will subside, according to a Kyodo News survey.

In the survey of 106 companies, including Toyota Motor Corp and SoftBank Group Corp, 13 firms predict the economy will be flat as people remain cautious about the pandemic. But none of the firms say it will contract.

Of the surveyed companies, 84 expect growth to be moderate in the year ahead, while five see a more solid expansion.

With multiple answers allowed, 91% of them that expect growth cited a pickup in consumer spending, followed by 64% predicting the unusual situation caused by the pandemic will return to normal, 35% forecasting that capital investment will rise, and 19% looking forward to a recovery in the U. economy.

The overall percentage of firms forecasting growth in the world’s thirdlargest economy is up from the 74% in a similar Kyodo News poll a year earlier.

Prime Minister Fumio Kishida has vowed to minimise the spread of the Omicron variant of the coronavirus while moving swiftly to get the economy back on track.

The fifth wave of infections, which took place when Tokyo hosted the Olympics last summer, prompted the government to declare a state of emergency in a number of prefectures and urge people to refrain from making nonessential outings.

The lifting of the emergency on Oct 1 has raised expectations that demand will get close to pre-pandemic levels among a number of industries, especially leisure-related ones such as travel and restaurants.

Japan has not yet seen a sizeable boost in economic activity compared with the United States and Europe, where so-called revenge spending is conspicuous.

“Coronavirus countermeasures are still insufficient, and it will take time for (the economy) to return to prepandemic levels,” one company in the food industry says.

Consumers in Japan have also continued to tighten their purse strings as prices of some daily supplies have been hiked due to rising raw material costs and the weakening of the Japanese yen.

Among Kishida’s major policy items, the Kyodo News survey found that 54% of the companies backed the promotion of digital transformation.

Kishida’s push for renewable energy followed with backing from 48%.

Under the target of reducing carbon dioxide emissions to net zero by 2050, the government aims to have renewable energy account for 36 to 38% of Japan’s total power generation capacity in fiscal 2030, more than double the 18% recorded in fiscal 2019.

Some 39% of the surveyed firms say they believe it is desirable for renewables to account for between 35 and 39%, while 20% say they think such energy should account for 40% or more over the total capacity.

Kyodo News conducted the survey between mid-November and early December.