My point on Japan.
TOKYO, Japan (April 2) - Just as Prime Minister Ryutaro Hashimoto left to give a pep-talk on Japan's economic situation to world leaders on Thursday, the nation's companies and financial markets gave the economy a resounding thumbs down.
A Bank of Japan survey found confidence at companies large and small, manufacturers and non-manufacturers alike, plunged in late March compared with the last survey in December.
With the worst headline figure in years, the BOJ's closely watched ''tankan'' survey of business sentiment confirmed that Japan is in a recession, economists said.
Norio Ohga, the head of Sony Corp., one of Japan's high-flying corporate stars, even declared the economy ''on the verge of collapsing.''
For Hashimoto, who headed off to a London summit of Asian and European leaders just minutes before the survey's release, the tankan survey was sure to make it tougher to convince the other leaders that he can get Japan back on track and lead an Asian economic revival.
Tokyo stocks logged their worst decline of the year, and the yen fell briefly to a three-month low against the dollar.
''We're just starting to see Japan's darkest hour,'' said Jesper Koll, chief economist in Tokyo for J.P. Morgan, adding that the survey confirmed that the Japanese economy had slipped into a deep recession.
The BOJ's diffusion index for major manufacturers, a key gauge of business confidence, sank to minus 31 in March from minus 11 in December, when the previous survey was conducted.
The figure -- the worst reading since August 1994 -- was well below the average forecast of minus 23 in a Reuters survey of 18 economists and far gloomier than the minus 15 reading the companies themselves had forecast in the previous tankan.
The sagging sentiment reflected sluggishness in demand since last autumn, said BOJ statistics and research chief Masayuki Matsushima. Falling demand pushed up inventories while slumping production hurt profits, which in turn worsened a slowdown in capital spending, he said.
Big non-manufacturers logged an index of minus 30, compared with the Reuters average forecast of minus 28 and the December tankan forecast for March of minus 22. |
