Japanese Companies Gripped by Pessimism

02 October 2008

TOKYO: Business sentiment among some of Japan's biggest companies has gone negative for the first time in five years as the country's economy flirts with a downturn, reports the Bank of Japan's latest quarterly Tankan survey. 

According to the survey, the country's largest manufacturers' confidence in the current business climate fell from a score of +5 in June to –3 in September, the lowest figure since 2003.

Among major non-manufacturers, the business situation was rated at +1, down from +10 three months ago; while small manufacturers (–17) and small non-manufacturers (–24) were considerably more pessimistic.

The country's central bank also reports that Japan's major corporations have reduced their capital spending forecasts by some 1.7% for the financial year to March 2009.

Tomoko Fujii, head of economics and strategy at Bank of America in Tokyo, says: "Global demand is going to worsen. Today's results only partly reflect the effect of the financial crisis."

Business sentiment in Japan hit a record low during the recession of 1998, when the index of the country's biggest manufacturers registered a score of –51.

Data sourced from International Herald-Tribune; additional content by WARC staff