Japan Inc unenthused over Abe's stimulus, BOJ easing: Reuters poll

Sun Aug 21, 2016 8:11pm EDT
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By Tetsushi Kajimoto

TOKYO (Reuters) - Japanese companies overwhelmingly say the government's latest stimulus will do little to boost the economy and the Bank of Japan should not ease further, a Reuters poll showed, a setback for policymakers' efforts to overcome deflation and stagnation.

Prime Minister Shinzo Abe this month unveiled a 13.5 trillion yen ($135 billion) fiscal package of public works projects and other measures, vowing a united front with the BOJ to revive the economy and raising speculation of a surge in government spending essentially financed by the central bank.

But less than 5 percent of companies believe the steps will boost the economy near-term or raise its growth potential, according to the Reuters Corporate Survey, conducted August 1-16.

"It's disappointing that the stimulus focuses on public works, and it lacks attention to promoting industry and technology that would lead to future growth," said a manager at a precision-machinery maker.

Abe took office 3 1/2 years ago, pledging to reboot the economy with aggressive monetary stimulus, fiscal spending and reform plans. After an early spurt of growth and surging corporate profits, helped by a sharp fall in the yen, the economy is again sputtering and prices are slipping, underscoring the challenge for Japan to beat nearly two decades of deflation and anemic growth.

"Unless drastic steps are taken to fix the root of Japan's problems - the falling birthrate and working population - solid economic growth won't return ... only public debt would pile up without sustainable growth," said an electrical machinery firm.

At the same time, 63 percent urged the government to expand fiscal support for new technology such as the Internet of Things, and artificial intelligence.

Companies voiced concerns about an uncertain outlook for consumer spending and the broader economy, urging Abe to accelerate structural reforms, the "third arrow" of his "Abenomics" program, which many economists say has been neglected.   Continued...

Factory chimneys are seen at Keihin industrial zone in Kawasaki, south of Tokyo, Japan, August 18, 2016. Picture taken on August 18, 2016.  REUTERS/Kim Kyung-Hoon