Japanese Business Feels Economic Squeeze

08 July 2008

TOKYO: Increasing energy costs and the rising price of raw materials has slowed Japan's economic expansion. The central bank says the situation has worsened in eight out of nine regions since April.

A report from the Bank of Japan says household spending's "sluggishness became increasingly apparent, although it remained generally firm".

Consumer confidence is at a six-year low as prices -excluding fresh food - rose 1.5% in May from a year earlier, the fastest pace since 1998.

In addition, the bank's most recent business survey showed confidence among large Japanese manufacturers is at its lowest since September 2003, and big companies expect earnings to fall for the first time in seven years.

Comments Mari Iwashita, chief market economist at Daiwa Securities: "It's too early to say whether Japan will slip into a recession or not."

Data sourced from Bloomberg.com; additional content by WARC staff