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TOKYO, Jan. 3 (AP) – Major Japanese companies have become more pessimistic about the economy given rising costs and a weaker yen, according to a Kyodo news agency survey.
The survey of 117 companies found that more than half (56%) expect the economy to grow this year. That’s down sharply from 84 percent a year ago, according to the survey released Monday.
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In the annual survey, the second-lowest share of companies forecasting growth in a decade also expressed concern about a slowdown in the U.S. and China in 2023.
The war in Ukraine has pushed up prices for oil and other raw materials, while the yen has weakened against the dollar, raising risks for the world’s third-largest economy.
The gloomy outlook also reflects fears of a possible global recession as central banks in the U.S. and other major economies raise interest rates to fight inflation.
The dollar-yen exchange rate rose from 115 yen at the beginning of the year to around 150 yen, the highest point last year. On Tuesday, it was trading around 130 yen.
Just 3 percent of companies surveyed said a weaker yen would benefit them, and about a third said it was a problem because it raised the cost of manufacturing inputs and energy, hurting their bottom line.
Japan’s economy shrank at an annual rate of 0.8% in July-September as epidemic prevention measures were eased in late summer, allowing normal business activity and travel to resume. Exports rose 2.1% on an annual basis. Growth in the previous fiscal year ended March was 2.5%.
Toyota Motor Corp. is one of the companies expected to perform relatively well this year. Like other major exporting manufacturers, it benefits from a weaker yen as it repatriates profits earned overseas.
Energy, telecom and technology firm SoftBank Group Corp also expects improvements in the coming months, according to the survey, which was conducted between late November and mid-December.
Despite the spike in cases in recent weeks, consumer spending has been recovering as Japan ends restrictions on business activity to combat the COVID-19 outbreak. Most companies predicting a positive outlook for 2023 cite this as the main reason for optimism.
About a third of the companies surveyed said they did not expect major changes this year, while seven expected a modest contraction. (Associated Press)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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