Business confidence in Japan falls 34-year low

December 15th, 2008 - 8:23 am ICT by IANS  

Tokyo, Dec 15 (DPA) Business confidence among Japan’s largest manufacturers fell the most in 34 years, the Bank of Japan’s quarterly Tankan survey revealed Monday.An index that measures confidence among the largest makers of cars and electronics dropped to minus 24 from minus three, according to the survey. The decrease of 21 points is the largest since February 1975, but analysts said it was expected.

This indicates that many companies are likely to slash more jobs and drastically lower spending, which will push the economy into a deeper recession.

As the export slowdown spreads to emerging markets, which propped up Japanese car and electronics makers when the demand from the US and Europe dwindled, Japanese manufacturers said they planned sharp cuts in factory output.

The Japanese yen’s 17-percent gain against the dollar since September has lowered the value of overseas sales.

Last month, the central bank’s governor, Masaaki Shirakawa, described the economic decline as “drastic,” and the bank cut its key lending rate to 0.3 percent in October.

On Friday, Japanese Prime Minister Taro Aso announced a 23-trillion-yen ($255-billion) assistance package for the economy, while warning of a sharpening of the country’s recession and a possible re-emergence of deflation.

Aso said that tax cuts for homeowners, around 13 trillion yen in support for small-and-medium enterprises and other direct support for businesses were included in the plan.

Consumer confidence in the world’s second-largest economy fell to a record low in November, and unemployment is rising at its fastest rate since the “lost decade” of deflation in the 1990s.

The Japanese government announced a 26.9-trillion-yen economic stimulus package in October, which parliament has yet to pass.

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