90% of top Japan executives say economy will recover over next 6 months

The Yomiuri Shimbun

17:11 JST, January 3, 2022

Over 90% of the 30 top executives at leading companies believe the economy will pick up over the next six months or so, according to a survey by the Yomiuri Shimbun.

More than 40% of the executives said the economy will grow in real terms in 2022 by at least 3% from the previous year. There are fears the omicron variant of the novel coronavirus will spread further in the third year of the COVID-19 pandemic, but the prevailing view among the executives was that private consumption will improve.

The survey was conducted via interviews or in writing between mid-November and mid-December last year.

Regarding the business forecast for the next six months or so, three executives said the economy would take off quickly, while 25 said it would improve moderately. Only two said it would come to a standstill.

With more than one answer allowed, 27 executives said the recovery would be caused by an upturn in private consumption, while 18 cited the balancing of economic activities with the prevention of infections.

Their expectations for a recovery were also illustrated by their forecasts regarding the real economic growth rate for 2022. Twenty-three top executives, or over 70%, said the economy will grow in real terms by at least 2.5%. Among this number, 13 said it would grow by at least 3%.

Twenty-three executives said the economy has recovered. Among this group, four said it had improved notably, while 19 said it has been turning upward moderately. In contrast, seven respondents said it had come to a standstill.

The upturn in private consumption was cited by 22 respondents, the largest number, as a reason for the economy’s improvement. This was followed by 18 people choosing the containment of coronavirus infections, and six naming the recovery in investment in plant and equipment. More than one answer was allowed.

Regarding the 2022 high for the Nikkei 225, a total of 11 managers chose 32,000, the most popular choice. At least 30,000 was chosen by 27 executives, or 90%.

In 2021, the Nikkei stock average temporarily topped 30,000 for the first time in 31 years. A majority of the executives predicted that stock prices will rise this year, too, in step with an economic recovery.

Timing of turnaround

During the first sale of the New Year at Seibu Ikebukuro department store in Ikebukuro, Tokyo, on Saturday, shoppers seeking a New Year’s grab bag lined up before the store opened. Sales for the day were up 60% from a year earlier, according to Seibu Ikebukuro.

There are hopeful signs regarding private consumption, and many executives were optimistic about the business outlook six months ahead.

Nonmanufacturing sectors, including the food service and tourist industries, have been hit hard by people refraining from going out over the past two years. Executives in these areas are hoping that consumption will be energized by the lifting of restrictions on economic activities.

Takeshi Niinami, president of Suntory Holdings Ltd. said: “People have a pent-up desire to buy things. If we can control the infection situation well, things will surely evolve in a very positive way in the days ahead.” Suntory Holding’s business performance has deteriorated due to a plunge in the food services sector.

In the manufacturing sectors, which have recovered more quickly than other areas, companies have seen their business performance worsen since the second half of last year due to the limited supply of semiconductors and a shortage of parts and components triggered by supply chain disruptions.

However, Keiji Kojima, president of Hitachi, Ltd., said, “The shortage of semiconductors will be resolved little by little, and supply chains will get back to normal gradually.”

Executives were split over when the business environment will return to a level comparable to the pre-pandemic period. Four of the 30 top executives said it had already done so, including Kenichi Hori, president of Mitsui & Co.

Fourteen executives said it will return to that level sometime this year, while no one predicted that would happen during January-March 2022. The April-June period was chosen by six executives, July-September by three, and October-December by five.

In contrast, six executives said their business environment would return to a pre-pandemic level in 2023 or later. Among them was Takashi Goto, president of Seibu Holdings Inc., which has seen the use of its transport services and affiliated hotels fall.