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2016年4月 3日 (日)

日銀短観悪化 景気下支えに重要なG7協調

The Yomiuri Shimbun
Cooperation of G-7 nations crucial in order to prop up global economy
日銀短観悪化 景気下支えに重要なG7協調

Economic prospects are becoming increasingly uncertain.

The headline diffusion index for business sentiment among large Japanese manufacturers stood at plus six, according to the Bank of Japan’s quarterly Tankan survey for March, down six points from the previous survey for December.

The index for large nonmanufacturers declined by three points to 22, the first decline in 18 months. The sentiment index for small and medium-size firms fell in both the manufacturing and nonmanufacturing sectors.

Due to the business slowdown in emerging economies, plus the yen’s appreciation and drops in stock prices since the turn of the year, pessimism has been growing stronger over business prospects. Slackening domestic consumption is also behind the weak index reading. It is no wonder that the current business sentiment showed a retreat.

It is a matter of concern that the index looking three months ahead shows a further deterioration in business sentiment.

The assumed exchange rate on which this forecast is based is ¥117.00-99 to the U.S. dollar, about ¥5 weaker than the current level. If the current strength of the yen continues, corporate performance will further deteriorate.

To prevent an economic downturn, the government and the Bank of Japan must make all-out efforts to ensure economy-first policy management.

It is worrying that no growth engine can be found to drive the global economy following the slowdown of the Chinese economy.

Abe’s leadership tested

During a meeting with U.S. President Barack Obama in Washington on Thursday, Prime Minister Shinzo Abe said that the Group of Seven major countries “must lead the global economy for a certain period of time.”

It is essential for Japan, the United States and Europe to pull together and mobilize all possible policy tools such as structural reform and fiscal stimulus measures.

At the Ise-Shima G-7 summit in Mie Prefecture set for May, Abe will be required as chair of the meeting to take the leadership in coming up with practical cooperative policies.

It is also necessary to deal with the capital flight back to developed countries, which is a factor behind the turmoil in emerging economies. A common understanding must be forged so that a hasty hike in U.S. interest rates will not cause further damage to emerging economies.

The latest Tankan survey shows that plant and equipment investments by major firms likely grew considerably in fiscal 2015, which ended on March 31. This is a favorable factor for realizing growth led by the private sector.

However, ordinary corporate profits are expected to decline in fiscal 2016. Amid the likely prospect that corporate achievements will hit a ceiling, businesses will be put to the test as to whether they can maintain their willingness to invest.

Firms continue to face a serious lack of manpower, so it is important for them to achieve labor saving and enhance productivity. Top corporate executives should not hesitate to make advance investments to realize new growth.

Policy assistance is also important to give forward-looking firms a supportive push. The government must expedite efforts to ramp up growth strategies by more quickly lowering the effective corporate tax rates and abolishing regulations hindering the market participation of new corporate entrants.

(From The Yomiuri Shimbun, April 2, 2016)


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