The fallout from the Great East Japan Earthquake has led to a sharp spike of pessimism among business executives, according to a survey of executives at 100 companies by The Asahi Shimbun, which found close to half believing the Japanese economy was headed downhill.
The fallout from the Great East Japan Earthquake has led to a sharp spike of pessimism among business executives, according to a survey of executives at 100 companies by The Asahi Shimbun, which found close to half believing the Japanese economy was headed downhill.
"The disasters threw cold water on the entire economy," Fujitsu Ltd. President Masami Yamamoto said.
The Asahi survey is taken twice a year, with the latest conducted between May 30 and June 10 and involved interviews with the company president or other high-ranking executive.
Asked about the future course of the economy, 29 companies said it would worsen or worsen rapidly. The last survey conducted in November 2010 had no companies that gave either of those two responses.
Another 18 companies in the latest survey said the economy would gradually decline.
The major reasons for the increased pessimism is the decline in personal consumption and corporate profits due to the March 11 quake and tsunami.
While there were 34 companies that said the economy was now standing still, that was about half the 67 companies that gave that response in the last survey.
Six companies said the economy was gradually recovering, while another 13 said there was some optimism even though the economy was standing still. Those are similar figures to the last survey.
Secom Co. President Shuji Maeda said, "The economy appeared to be picking up until March 11, but it has since stopped growing."
Many companies gave as negative factors the decline in production and sales activities among corporations directly hit by the disasters as well as the restrained personal consumption trend since March 11.
While 55 companies said the disasters would have a negative effect on their corporate performance this fiscal year, only one said it would have a positive effect.
Although 67 companies said the economy would move toward recovery within the year, Sekisui House Ltd. President Toshinori Abe said, "We cannot eliminate fears of a worsening of the economy if there is a mistake in decisions on policy."
Many executives expressed concerns about economic activity stagnating due to the accident at the Fukushima No. 1 nuclear power plant and electricity shortages this summer.
There was also strong criticism of the government, with 75 companies saying they could not praise what Prime Minister Naoto Kan and his administration had implemented in rebuilding measures.
Fifty-two companies said they could not praise much what the administration had done, while another 23 said they could not praise it at all.
Many blamed Kan for a lack of leadership.
Yaskawa Electric Corp. President Junji Tsuda said, "The government is only coordinating matters and no progress is being made."
Sumitomo Rubber Industries Ltd. President Ikuji Ikeda said, "The government is only dealing with what is in front of it, and I cannot detect the will to rebuild or to come up with a vision for that process."
Only six companies said they could praise somewhat what the government has done.
Among the sympathetic responses was one from Osaka Gas Co. Executive Vice President Takashi Sakai who said, "While there are many areas where they failed, I also have doubts as to whether only the ruling party is to blame. At the root of the problem is the weakness of Japanese organization and crisis management."
There was also criticism about the political conflicts at the national level.
Resona Holdings Inc. President Seiji Higaki said, "Now is not the time for a political struggle. They should cooperate on important matters and make decisions as soon as possible."
When asked to choose two alternatives for securing the revenues needed for the rebuilding process, 67 companies said, "a review of the (Democratic Party of Japan) manifesto, including the child allowance."
Receiving 34 responses each were "tax hike" and "issuing government bonds."
Toshiba Corp. President Norio Sasaki said, "While a tax hike may be unavoidable in the end, the manifesto should be reviewed in order to reduce the amount of the hike."
Among tax hike options, 68 companies favored an increase in the consumption tax rate, while 10 said the individual income tax rate should be raised. Only two companies said the corporate tax rate should be increased.
Corporate executives were also asked their opinions about the future of nuclear energy in Japan.
While the business sector as a whole has tended to support the promotion of nuclear energy from the standpoint of maintaining competitiveness, there appears to be a change in views due to the Fukushima accident.
Only two companies said nuclear energy should be expanded, while 37 called for maintaining the status quo. Fifteen companies said dependence on nuclear energy should be reduced.
Mori Seiki Co. President Masahiko Mori said, "The safe reactors that are necessary should be operated. It was right to stop the Hamaoka nuclear plant. That was a brave decision by the prime minister."
Secom's Maeda said, "While it will be impossible to eliminate all nuclear plants, if the ratio of new energy sources was increased it would lead to greater economic activity in such fields as storage batteries and solar panels."
Even those calling for the promotion of nuclear energy referred to the need for safety.
Jo Kato, a senior executive officer at Mitsubishi Estate Co., said, "The necessity will not go away in the future. Construction of planned nuclear reactors should proceed after reviewing safety standards."
However, Masa Matsushita, a senior corporate officer at Kokuyo Co., said, "If construction of nuclear plants is stopped, Japan will lose the technology needed to build nuclear plants."
Even companies that did not take a clear stand recognized the need for more thorough discussions on Japan's energy policy.
Ichiro Yoshimoto, an executive with McDonald's Holdings Co. (Japan), said, "Rather than focusing on just the pros and cons of nuclear energy, the issue should be discussed within a larger debate on comprehensive energy policy."