A recent survey reveals growing Japan economy concerns among major companies. Only 30 percent of firms believe the domestic economy is expanding. This marks a sharp decline from 71 percent who felt positive back in January. The drop mainly reflects worries about tariffs imposed by the United States.
The survey covered 113 large firms, including Toyota Motor Corp. and Nippon Yusen K.K. It took place between July 9 and August 1, with some responses submitted before a trade deal was finalized on July 23. Out of all respondents, just 33 percent expect moderate economic growth. Meanwhile, 56 percent see the economy as stagnant, and 11 percent think it is slightly shrinking.
Despite these concerns, 59 percent of companies forecast an increase in profits this year. Only 7 percent anticipate their profits will decline. Many firms hope their solid business results will counterbalance the negative impact of tariffs.
The new trade agreement between Japan and the U.S. will lower auto tariffs to 15 percent. This comes in exchange for $550 billion in Japanese investment in the United States. Before the deal, combined auto tariffs stood at 27.5 percent, with other goods facing 25 percent tariffs.
Oji Holdings Corp., a paper product manufacturer, warned that rejecting globalization and free trade could hurt the global economy. This opinion appeared in the survey’s comment section, showing growing unease about protectionism.
Additionally, 53 percent of firms plan to raise prices on products or services within the next year. This decision is due to long-term yen depreciation and rising labor costs caused by worker shortages. However, only 8 percent of companies intend to increase wages at the same or a higher pace, while 27 percent remain undecided.
The Japanese Trade Union Confederation reported that the average wage increase from over 5,000 unions reached 5.25 percent last year. This figure marks the second consecutive year above 5 percent. Still, real wages have not kept up with inflation. The Ministry of Health, Labor and Welfare stated that real wages dropped 1.3 percent in June from a year earlier. This decline marks the sixth straight month of falling real income.
When asked about potential risks, 76 percent of companies said an earthquake would most affect business. Moreover, 56 percent cited a possible conflict involving Taiwan as a major concern. Overall, Japan economy concerns remain high due to tariffs, wage issues, and geopolitical risks. Firms continue to navigate a challenging environment with cautious optimism for the future.
