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Japan firms want fiscal support, help on yen and commodities: Reuters poll -Breaking


© Reuters. FILE PHOTO : A container is seen in a pier for cargo at a port near Yokohama on December 22, 2008. REUTERS/Issei Kato/File Photo


By Tetsushi Kajimoto

TOKYO, Reuters – The overwhelming majority of Japanese companies want fiscal support to continue at least through the year. Two-thirds also want to alleviate rising commodity prices, and a weaker yen.

According to the Reuters Corporate Survey, companies from the third largest economy in the world feel the need for additional support even though major economies such as the United States and Europe are reducing their crisis-mode stimulus programs.

It also reveals how rising commodity costs and the weakening of the yen are making it harder for Japanese companies to grow, despite the slow pace of growth in Japan and the aging population.

A manager at a ceramics producer wrote, under anonymity, that excessive yen weakness would drive up import costs driving up prices and raw materials even further.

Other people called for measures that would address rising oil prices, and to prevent a weaker Japanese yen. Rapid price increases could be more powerful than the stimulus programs implemented over two years.

The survey revealed that nearly 80% Japanese companies believe expansionary fiscal policy should be continued. This monthly survey, which was conducted between Dec. 22 and Jan. 7, surveyed 502 non-financial large- and medium-sized firms.

The stimulus should last through the year, 61% of which said it should. Another 18% wanted it in force through 2023 and beyond. 17% of respondents said that it should be ended immediately.

Although Japan is doing well relative to COVID-19 infected and killed rates, they have avoided severe lockdowns. On Sunday, however, stricter measures were reintroduced by the government in three locations. These actions are the first since September because of the Omicron variant.

A manager at a wholesaler stated that fiscal discipline was important, but that economic recovery and stability should be the priority.

A different manager at the ceramics manufacturer wrote that fiscal policy should remain expansive until non-manufacturers pick up, which illustrates a clear recovery trend.

Fumio Kishida, Prime Minister of Japan, was supported by many firms who believe that economic recovery should be prioritized in the immediate future.

A large majority of businesses thought it impossible for the government reach Kishida’s goal of creating a surplus in the primary budget by 2025 fiscal year.

The target is seen by most private sector economists as an impossible task, considering the huge stimulus cost that has caused the industrial world to have its largest debt load, which amounts to more than twice the economy’s size.

A decline in Japan’s fiscal situation could lead to concern over currency depreciation or runaway inflation.

For now though, there was a split on the inflation outlook. A third of the firms expected the current commodity-driven inflation to last through the first and second quarters, and a third anticipated it staying through the second.

Prices continued to rise in the rest of the world, with some exceptions.

($1 = 115.3000 yen)

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