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70% of major firms expect economic expansion this year: survey

Nearly three out of four major Japanese firms believe economic
conditions will improve toward the end of this year, according to a
Kyodo News survey released Saturday, indicating optimism in the near
term amid slow-but-steady growth.

Of a total of 108 companies surveyed in mid- to late July,
including Toyota Motor Corp. and Sony Corp., 76, or 70 percent, said
the economy will likely have "expanded" or "expanded moderately" by
the end of the year, while 26 companies said they expect it to remain
flat. Three firms expected a slowdown.

The upbeat business sentiment comes as Japan's economy has
continued moderate growth since 2012. The International Monetary Fund
projects the country's nominal gross domestic product to reach 546.24
trillion yen ($5 trillion), up from 494.96 trillion yen five years
ago.

But concerns remain that recently heightened tensions over North
Korea's nuclear and missile programs could put a drag on Japanese
stocks and lead to the yen's appreciation, affecting the real economy.

Tensions between North Korea and the United States have been
escalating, with the two countries exchanging barbs over a potential
military attack.

In real terms, the IMF forecasts 1.3 percent growth this year,
revising upward its April estimate of a 1.2 percent increase.

The top reason for expecting economic growth this year was a
recovery in capital investment, cited by 49 companies. Recovery in
personal consumption was the second most common answer given by 37
firms.

Regarding plans for capital investment in the 2017 business year
through next March, 59 companies said they plan to increase spending,
while 31 said they will invest the same amount as last year. Eight
firms planned to cut back on capital investment.

Prime Minister Shinzo Abe, who earlier this month reshuffled his
Cabinet in a bid to staunch falling support for his administration,
still needs to deal with allegations of cronyism over the opening of
schools in western Japan before he can focus on further shoring up
the economy.

Among Abe's policies, free trade deals including the one
recently agreed between Japan and the European Union were the most
popular, supported by 50 surveyed companies. Forty-eight firms said
the removal or lowering of tariffs would have a beneficial effect on
their business.

A major food company said the cons of increased competition from
cheap imports would be more than offset by the pros of reinvigorating
the economy. No companies made a case for protectionism by saying
trade deals would have an adverse effect.

On labor shortages, 54 companies said they have enough workers
while 49 said they do not. Answers were split by industry, with
automakers citing more shortages than financial services companies.

The top solution was the creation of workplaces that women can
thrive in, suggested by 68 firms. It outpaced reduction of
unnecessary work, more elderly workers, and the use of technology
such as artificial intelligence.

Asked for examples of reforming work conditions, some firms said
they have implemented flexible hours and telework.

Four companies set up mandatory rest periods between leaving the
office after work and coming back in. None had four-day work weeks. (Aug. 13)