Japanese Economy Loosing Manufacturers´ Confidence

The Tankan quarterly survey is one of Japan’s most watched indicators as far as business and economy go and it is issued by the Bank of Japan. This year the confidence in Japanese manufacturers has decreased for the very first time since the first quarter of 2009.The decrease in the Japanese market was not as high as initially expected. This is mostly due to the swift recovery made by Japan after the international financial crisis that occurred two years ago. Confidence that Japan will recover still remains.

The comparison between the large number of manufacturers reporting positive conditions and the number of manufacturers reporting negative conditions decrease from +8 to a +5. +5 was the number reported three months ago, so the decrease is quite significant if we take into account the short period of time. The same goes for big non-manufacturers even if the margin is only of +1 as compared to +2 in September. Forecasts are not however very optimistic as far as the next quarter is concerned, with an expected decrease of the index to -1 for large manufacturers and -2 for big non-manufacturers.

Expectations are that Japan´s economy will freeze or will continue to decrease in this quarter after it had grown with 1.1 percent per quarter from July and until September. The government has reacted to these forecasts announcing a cut of 5 percentage points of the effective corporate tax and has advised the Bank of Japan to start taking measures in order to influence an economic decrease and in order to combat deflation.

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