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Despite Signs of Economic Recovery, Japanese Business Confidence Remains Low - 2002-04-01


A quarterly survey of Japanese business executives shows confidence is low despite signs of economic recovery . But there are signs of hope for a future turnaround.

The Bank of Japan's quarterly Tankan survey released Monday shows that confidence among Japanese companies is low, but has stopped sliding for the first time in a year.

The report's index subtracts the percentage of companies saying business conditions are good from those saying they are bad. The index for large manufactures remained at minus 38, unchanged from the previous survey taken in December. However, the report suggests that many large manufacturers are becoming more optimistic and predict that business will improve in the months ahead from a global economic rebound.

Jesper Koll, an economist at Merrill Lynch in Tokyo, said that the Tankan score matched his expectations. "It basically confirms that the economy has hit bottom at the end of last year," he said. "And that for now, the recovery is very lopsided only. You only have export-led recovery while domestic demand is still being pulled lower."

In South Korea, people are becoming more positive about the economic outlook. The Korean central bank says the country's consumer confidence level rose to 123 in the first quarter of this year, nearly 30 points higher than the previous quarter. A reading higher than 100 means that most of those surveyed expect an improving economy, while a mark below 100 indicates the opposite.

The survey also says that South Koreans are planning to spend more during the next six months as the nation's economy strengthens further.

South Korea's economy has also received a vote of confidence from international ratings agency Moody's Investors Service, which last week raised the country's sovereign rating by two notches. The nation's economy is forecast to grow by four to five percent this year, making it one of the Asia's strongest.

Taiwan has taken a major step in the overhaul of its investment policy toward China. After months of debate, the government has partially lifted a ban on Taiwanese chipmakers that prohibited them from setting up semiconductor plants on the Chinese mainland. Taiwan's prime minister says that local chipmakers will be allowed to build plants in China under certain conditions. The decision will allow the island's flagship chipmakers to plunge into the mainland's booming technology sector, which is emerging as a future global hub for electronics manufacturing.

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