Japanese Firms See No Foreseeable Escape from Deflation

Seventy percent of Japanese companies see no foreseeable escape from deflation, according to a Reuters survey that was conducted May 9-23. That's up from 48% in January.

One big worry of 79% of the surveyed companies is deflation's impact on consumer prices through 2017.

The survey polled 510 firms, and respondents answered 240 questions on deflation.

Here's more from a May 26 Reuters article:

Japan Inc has become increasingly pessimistic about the country's ability to beat deflation … .

Most Japanese companies [in a Reuters survey] … said they did not think Prime Minister Shinzo Abe's latest growth strategy that centers on lifting the mininum wage and investment in technology would help bring significant improvement to a faltering economy.

Abe swept into office three years ago with bold plans to end decades of deflation and bring about sustainable growth. But while unprecedented monetary policy in tandem with fiscal stimulus met with some initial success, any gains in ridding the country of a deflationary mindset look like they could be slipping away. …

'Demand is not on an upward trend, and household spending is not rising because base pay is not rising,' wrote a manager at a chemicals company.

'It has become difficult for companies to lift prices.'

Japan has only managed very mild inflation since Abe took office and the pace of price gains has been slowing since 2014. Core consumer prices in March fell 0.3 percent from a year earlier, the fastest decline in three years due to lower oil prices. …

In written comments, corporate managers criticized the [government's] policies as too piecemeal to have much of an impact on a shrinking labor force and weak consumer sentiment.

You can read the entire article by following the link below:

Enter your email address to get email updates and special offers.
It's free!

* By submitting this form you authorize EWI to send regular emails and updates. You may unsubscribe from our mailing list at any time.