Posted on: Saturday, August 18, 2001

Survey assesses Japan economy

TOKYO — Business sentiment is deteriorating rapidly in Japan, with three out of four major corporations here saying the economy is slipping back into recession, according to a newspaper survey.

The Yomiuri Shimbun's study found that 76 out of 100 big companies polled said that the economy is headed toward negative growth — a sharp rise over the 21 companies that gave that response in a survey in April.

A total of 65 companies that responded to the survey conducted earlier this month said they felt the economy was entering a moderate recession, while 11 said the slump would be severe.

The reasons cited most for the darker outlook were the steep downturn in the U.S. economy, stagnant private consumption, instability in the financial system and the sharp skid in Japanese stock prices, which are hovering at a 16-year low.

Companies are bracing for a period of low economic growth as Prime Minister Junichiro Koizumi prepares to implement structural reforms that would close the tap on public works spending and expose coddled industries to more competition.

Despite the pain the reforms are expected to bring, most companies in the Yomiuri survey said they approve of Koizumi's prescription for the economy, with a total of 82 companies saying they back the government's basic economy policies.