April 14, 2021

Awani Review

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The business environment in Japan is on the rise

AAs a sign of the coming economic recovery, the mood among major Japanese industrial companies has turned positive for the first time since the fall of 2019. According to the Bank of Japan’s quarterly Tongan survey, the index of business conditions for large working firms rose from minus ten to five points in March. The indicator was last at this level in September 2019. That was before the consumption tax increase and before the Govt epidemic broke out. A positive value of the index indicates that large companies evaluate the situation positively rather than negatively.

Patrick Welder

Correspondent for Business and Politics in Japan based in Tokyo.

Despite a third wave of epidemics in Japan that ended in March and a shortage of semiconductors worldwide, the result was better than the average expected by financial analysts. In the first quarter of the year, companies were relatively good. The Bank of Japan collected the results of the study from late February to the end of March.

On the positive side of the Japanese economy, there has been a steady exchange rate of the Japanese yen in recent months and a growing global economic recovery, which, like the United States, has contributed to additional government spending to boost the economy. It was only in March that the Bank of Japan confirmed its intention to maintain its further expansionary monetary policy.

Most economists expect the Japanese economy to shrink in the period from January to March after the strong second half of 2020, as a result of the temporary viral emergency in Tokyo and other major cities in the country. However, in the new fiscal year starting this Thursday, a strong recovery is forecast. For example, economists at Morgan Stanley MUFG expect 3.9 percent growth after a 4.8 percent decline in the last fiscal year. Private consumption was good in February despite corona concerns. The unemployment rate remained unchanged at 2.9 percent most recently. However, this does not take into account the many workers who have been temporarily laid off.

The brilliance of the business environment in the manufacturing sector spread to almost all sectors. This progress was particularly strong in the manufacturing, metallurgical and automotive construction of machinery. Among other things, this means that the shortage of semiconductors in the automotive industry has not yet had a dramatic impact on Japanese automakers. At the start of the new fiscal year beginning this April, large manufacturing companies are forecasting a 3.2 percent increase in their investments. The improvement of the situation between the large manufacturing companies had an impact on the medium and small companies through supplier relations.

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