Mon, Jan 05, 2009 page10

• Japanese firms say recovery is unlikely this year: reports

  • AFP
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  Major Japanese companies are bearish over the prospects for the country’s crisis-hit economy, with a majority of them seeing a recovery as unlikely until 2010, surveys showed yesterday.

  The Mainichi Shimbun carried out a corporate sentiment survey late last month, covering 121 major companies across the nation, including leading names such as Toyota Motor Corp and Sony Corp.

  The poll showed that 41 percent of the respondents said the Japanese economy would recover in the first half of 2010 and 24 percent said a rebound would come in the second half of next year.

  None at all expected the economy to recover in the first half of this year, while 22 percent forecast that things would get better later this year.

  In a separate poll carried out by the Tokyo Shimbun, 68 percent of companies said the economy would pick up next year, while 14 percent said the recovery would be delayed until 2011 or later.

  One in four companies said they have already cut or planned to cut temporary contract workers, the survey carried out last month of 208 major companies showed.

  Japanese companies have cut tens of thousands of jobs, mostly temporary contract workers, as demand for cars, cameras and other products wanes amid the global financial crisis.

  Meanwhile, Japan’s central bank chief warned yesterday that the soaring yen was hurting Asia’s largest economy and said he was looking at measures to cope with it.

  The yen recently hit a 13-year high against the dollar after the US Federal Reserve cut interest rates to virtually zero. A strong yen makes Japanese exports less competitive and cuts into repatriated earnings.

  “Amid the rapid downturn of the global economy, a strong yen has a negative impact on the [Japanese] economy,” Bank of Japan governor Masaaki Shirakawa told public broadcaster NHK.

  “The impact is big. So we, the central bank, would like to keep thinking of ways to cope with it, including through monetary policy,” he said.

  Shirakawa said the central bank would keep studying how it could lower private banks’ lending rates and make it easier for companies to procure the money they need for investment.

  But the bank has little room left to cut benchmark interest rates. On Dec. 19, it slashed its key rate to 0.1 percent to cope with the worsening global slowdown.

  The government has repeatedly hinted it could order the bank to intervene on the market to bring down the yen. Japan has not intervened on the foreign exchange market for nearly five years.

  Some analysts doubt whether intervention would be effective, considering the market’s negative view about the dollar in light of the woes in the US economy.

  The yen last week slipped to about 92 to the dollar, down from its 13-year high in the middle of last month of 87 to the dollar. It was at 114 to the US currency one year ago.
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