TOKYO - Japanese companies overwhelmingly think the nation’s longest postwar expansion is peaking, with two-thirds expecting a tax hike imposed this month by Prime Minister Shinzo Abe to hurt the economy, a Reuters poll showed on Friday.
And while most of the firms still don’t want the Bank of Japan to increase its stimulus, that opposition has weakened sharply over the past quarter as the U.S-China trade war has clouded prospects for global growth and export-reliant Japan. “The tax hike will hurt consumer sentiment considerably, which will exert an unpredictable impact on the Japanese economy,” a manager at a food-processing company wrote in the survey.
“A combination of a post-tax hike decline in demand and a sputtering global economy will clearly exert downward pressure on Japan’s economy,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.Companies in the Reuters survey that expected a recession largely think it will last at least a year, with a quarter expecting it to hit bottom late next year and 56% seeing the slump dragging into 2021 or beyond.
Haruhiko Kuroda, installed by Abe as BOJ governor six and a half years ago to spur growth and end decades of deflation, has driven the most aggressive asset purchases among major central banks, pushing some interest rates below zero. Some 42% of respondents said additional easing would have no effect on the economy, while the rest were split on whether more stimulus would on balance help or hurt growth.
Now, the sales tax in Japan is 10%. 10% for all kinds of sales. That's crazy!!!
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