Corporates To Remain Conservative Despite Better Conditions
BMI View: Although the Bank of Japan's (BoJ) Tankan survey in December recorded an increase in firms experiencing positive business conditions, few believed that these improvements will persist into the next quarter. This pessimistic outlook remains a key obstacle that Prime Minister Shinzo Abe is battling against, as corporate Japan once again revised down its projected capital expenditure for fiscal year 2013. This further suggests that an increment to workers' base wages is highly unlikely despite the Abe administration's numerous pleas to the business community, with a possibility of private consumption contracting in 2014 as the consumption tax hike is implemented.
Results from the Bank of Japan's (BoJ) quarterly Tankan survey for December revealed that, on the whole, a greater proportion of Japanese firms expect the pace of improvements in business conditions to taper off compared to the number which see better conditions materialising in Q313. With businesses consistently forecasting conditions below actual conditions experienced (see graph below), this highlights the conservative stance that has persisted among businesses despite the implementation of major fiscal and monetary stimulus, reflecting the difficulties that Abe is up against as he tries to revive the economy.
Corporate Japan Not Convinced
|More Firms Forecasting A Less Positive Outlook|
|Japan - Tankan Survey, Diffusion Index Of Firms With Favourable Versus Unfavourable Outlook, pp|