Japan manufacturers brace for euro zone breakup: Reuters poll

Mon Jan 23, 2012 1:07am EST
 
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TOKYO (Reuters) - Japanese manufacturers are bracing for a possible breakup of the euro zone, according to a Reuters poll released on Monday, with 65 percent saying they see a need to prepare for the currency block's partial or complete collapse.

Europe's two-year old sovereign debt crisis, which has left Greece teetering on the edge of default, has taken a heavy toll on Japanese corporate sentiment as exporters struggle with a strong yen and slower growth in China.

When manufacturers were asked if they are considering changing business plans in Europe, 31 percent of those responding said they are in the process of doing so or have already made changes. Of those firms, 90 percent said they could scale back operations or have already done so.

Many manufacturers were also looking to shrink operations in China and North America in favor of expanding in other Asian countries to tap demand for their goods, the survey showed.

Euro zone finance ministers will decide on Monday what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens after negotiators for private creditors said they could not improve their offer.

Resolving the issue of a Greek debt swap is key to putting Athens' debt on a sustainable path and avoiding a chaotic default that could threaten the whole currency bloc.

The poll, taken January 5-17, surveyed 400 big firms, of which 247 responded. The questions were part of the Reuters tankan for January, which was published on Friday.

The tankan, which is closely correlated with the Bank of Japan's quarterly tankan survey of business sentiment, showed manufacturers remained pessimistic about business conditions for the second straight month in January.

Manufacturers showed concern about China's growth prospects, with 50 percent saying they could change their business strategy as China's red-hot growth cools. Of those firms, 65 percent say they could shrink operations.   Continued...

 
<p>A worker stands on a ship in front of a cargo ship at a port in Tokyo August 18, 2011. REUTERS/Toru Hanai</p>