Six in 10 heads of Japanese companies expect the economy to have recovered half a year after this coming April's consumption tax hike, a Nikkei survey finds.
The quarterly poll of presidents or chairmen at key domestic corporations found that 60.6% believe that the economy will be in better shape than it is now in September 2014, up from 41.1% in the previous survey. The poll was conducted from Dec. 4 through last Friday, drawing responses from 147 companies.
A whopping 95.9% of respondents said the economy is improving, up from 93.8% in the poll from this past September.
Slightly more than four in 10 respondents expect the economy to have worsened or to show signs of slowing around next June. This is based on the view that the economy will slump right after the 5% consumption tax goes up to 8%, with consumers having finished their last-minute buying.
But the survey reveals that most of the business leaders see the economy perking up soon afterward. On the reasons for the improvement, with up to two responses allowed, a recovery in consumer spending was the most popular answer, at 49.4%, followed by 30.3% pointing to an improvement in the U.S. economy. An increase in capital spending was mentioned by 28.1%, with the same percentage saying domestic economic sentiment will remain strong after the tax hike.
"Government policies have started a virtuous cycle in the economy," the head of a major financial firm said. And the top official at a transport company predicted that exports will grow thanks to a weak yen and stronger overseas economies.
Slightly more than one in five respondents said they will increase domestic capital spending in fiscal 2014. Several plan to invest aggressively in cutting-edge technologies, with the president of an automaker signaling investment in environmentally friendly vehicles.
On the global economy, 84.3% said it is improving now. The figure rose 9 percentage points from the previous survey as business leaders felt better about the European and Chinese economies.
