Japan’s most closely watched measure of business confidence has fallen to an all-time low, the central bank said yesterday as the country slides deeper into its worst post-war recession.
Exports are about half what they were a year ago, unemployment is at a three-year high and consumers are spending less — all of which has shaken Japanese manufacturers who normally drive the world’s second-largest economy.
The Bank of Japan said its quarterly Tankan survey of large makers of electronics, cars and other products found confidence even lower than in 1975, when the country was still in the wake of the oil shock.
Confidence tumbled to minus 58 last month from minus 24 the previous quarter, a record decline in the Tankan index, which measures the percentage of firms that think business conditions are good minus those that think they are bad.
The previous record low was minus 57 in 1975.
As companies hit by collapsing demand idle more plants and lay off workers, the economy is set to shrink 6.6 percent this year, far worse than Europe and the US, says the Organization for Economic Cooperation and Development.
The Tankan found that manufacturers believed sentiment would stay gloomy, forecasting a confidence rating of minus 51 for June.
Major manufacturers said they expect a 62.7 percent drop in pre-tax profits in the 2008 financial year to March 31. They also forecast a 19.7 percent slump for the new fiscal year that began yesterday, the survey showed.
Large firms across all sectors plan to trim their plant and equipment investment by 6.6 percent on average for the current fiscal year, in contrast to sharp gains in corporate capital spending in recent years.
“The results precisely reflected the tough current economic environment,” Chief Cabinet Secretary Takeo Kawamura told a news conference, renewing the government’s pledge to speedily compile fresh stimulus measures.
Japan’s economy, which is officially in recession, shrank at an annualized pace of 12.1 percent in the last quarter of last year.
On Tuesday, the government said the unemployment rate hit a three-year high of 4.4 percent in February, while consumer spending fell 3.5 percent month-to-month.
To revive Asia’s biggest economy, Japanese Prime Minister Taro Aso outlined plans for a new stimulus package — Japan’s fourth since October — before he left for the G20 summit of world leaders that starts in London today.
Aso gave no price tag, but reports have said the extra spending is expected to total more than ¥10 trillion (US$101 billion) and aims to help create 2 million new jobs over the next three years.
“The Japanese economy is falling back into deflation,” SMBC chief strategist Daisuke Uno said. “The government should expand the size of additional fiscal policies together with stock-boosting measures.”
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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