Firms believing Japan economy growing falls to 30% amid tariff woes

The Mainichi

3 days ago

TOKYO (Kyodo) -- Just a third of major Japanese firms said the domestic economy was continuing to grow, falling from the 71 percent that said so in January, reflecting uncertainty over the tariffs imposed by U.S. President Donald Trump, a Kyodo News survey showed recently.
In the survey of 113 companies, just 33 percent said they expect moderate growth, while those that responded they were either "concerned" or "somewhat concerned" regarding the levies hit 68 percent.
The survey was conducted between July 9 to Aug. 1 among firms including Toyota Motor Corp. and Nippon Yusen K.K., with some answers submitted before the trade agreement before Japan and the United States was agreed upon on July 23.
Of the respondents, 56 percent said they believe economic growth was flat and 11 percent said it was contracting moderately.
But 59 percent forecast profits to grow, while 7 percent said they are expected to fall, with the majority hoping that solid business performance will offset the pressure implemented by the tariffs.
Under the trade deal agreed by Japan and the United States last month, auto and reciprocal tariffs will be lowered to 15 percent in exchange for $550 billion of Japanese investment in the United States.
Prior to the agreement, autos were set to face a combined 27.5 percent tariff, while other goods were threatened with 25 percent.
"Denying globalization and free trade may make the global economy struggle," paper product manufacturer Oji Holdings Corp. said about the tariffs, in the comment section of the survey.
Meanwhile, 53 percent of the companies surveyed said they are planning on hiking the prices of products and services within a year amid the long-term depreciation of the yen and rising labor costs attributable to a labor shortage.
Just 8 percent said they were planning on hiking wages at a higher or similar pace, while 27 percent said they were undecided.
The Japanese Trade Union Confederation, also known as Rengo, said last month that its final tally of the results of pay negotiations from over 5,000 member unions found the average monthly wage hike stood at an average 5.25 percent, the second straight year it has exceeded 5 percent.
However, salary growth has failed to keep pace with ongoing inflation, with the most recent data on real wages by the Ministry of Health, Labor and Welfare showing it fell 1.3 percent in June from a year earlier, marking the sixth straight monthly decline.
In a multiple-choice question asking what event would impede business, 76 percent answered an earthquake, while 56 percent said a Taiwan contingency.