The Bank of Japan's latest quarterly Tankan survey shows that the September 11 terror attacks in the United States have further damaged business confidence in the country. Business confidence has dropped for the third straight quarter in another indicator that the world's second largest economy is sliding into recession.
Top Japanese officials are warning that further aggressive steps to boost the economy are needed, after the release of the Bank of Japan's latest Tankan survey of business confidence.
The quarterly report released Monday shows that corporate sentiment has been further damaged by the terrorist attacks on New York and Washington. It had already been pessimistic due to Japan's lengthy economic downturn and more than a decade of low consumption.
Japanese government spokesman, Yasuo Fukuda, told reporters Monday the outlook is indeed gloomy. Mr. Fukuda says Japan's economic conditions are not good and are getting worse. He says it is a serious issue and the government needs to monitor the economy with this in mind.
The Tankan comes amid a deteriorating global economic environment, with Japanese exporters deeply concerned about the dropping consumer demand in the United States. This could mean more job cuts in Japan where unemployment is already at a record five percent.
Analysts say the results of the Tankan could prompt Japanese Prime Minister Junichiro Koizumi to announce a supplementary budget package within one month. Additional government spending has been the traditional prescription for the country's financial woes and one that reformist Prime Minister Koizumi had promised to end, saying more fundamental economic reforms were needed for long-term financial health.