Japanese manufacturer confidence worsened in the final quarter of 2022 to its lowest level in almost two years, a central bank survey showed, as cost pressures and the prospect of a slowdown in global demand clouded expectations. prospects for the third largest economy in the world.
However, service sector expectations improved for three consecutive quarters in the October-December period, the Bank of Japan’s closely watched “tankan” survey showed on Wednesday, as the impact of the coronavirus pandemic faded. coronavirus on consumption.
According to economists, the result illustrates the divergence between robust domestic demand, which is recovering belatedly from the scars of the pandemic, and worsening export prospects on fears of a global recession.
He also highlighted the challenge policymakers face in inciting businesses to raise wages and compensating households for rising costs of living, a factor the Bank of Japan sees as crucial. for inflation to sustainably reach its 2% target.
“The Japanese economy is not in bad shape and companies are sticking with their upward spending plans. Companies will also raise wages next year,” says Yoshiki Shinke, chief economist at the Dai-ichi Life Research Institute.
“But the key lies in the outlook for the external economy, as domestic demand is not strong enough to offset the impact of any large drop in global growth,” he added.
Both large manufacturers and non-manufacturers expect business conditions to worsen in the future, the survey showed, reflecting rising raw material costs and fears of weakening global demand.
While some companies complained of the hit from rising raw material costs, others saw relief from the easing of supply restrictions and progress made on price increases, the survey showed.