Nurturing the sprouts of recovery

景気回復のきざし

The tankan survey, which was conducted from Feb. 23 to March 31, finds that the confidence index for large non-manufacturers has turned positive for the first time in seven years and four months. Sentiment in the small-business sector has improved. The recovery lacks strength, yet activity is steadily expanding, aided by rising corporate profits and higher stock prices. It appears that deflation is receding, if not ending.

Still, uncertainties abound. One is the surge in the yen's exchange value. The economic recovery to date has been fueled largely by exports to China and the United States, Japan's two largest trading partners. The appreciating yen — which makes Japanese products more expensive abroad — will likely cut into export earnings. Prices for raw materials are soaring as China steps up imports. Unemployment is stuck at disturbingly high levels. Prospects for consumer spending are clouded.

The March survey, which incorporates new methods of selection and covers a wider range of sectors, provides a more accurate picture of Japan's changing industrial structure. The new survey areas include information and communications, restaurants and hotels, cram schools, welfare and nursing services for the elderly, and industrial waste disposal.

Business perception among major manufacturers has improved for four consecutive quarters, with the number of optimists exceeding pessimists by an increasing margin. Improvement has been most marked in sectors such as automobiles, precision machines and paper and pulp.

As for major non-manufacturers, confidence among retailers has improved strongly, reversing the negative trend of a quarter earlier. By contrast, small businesses in manufacturing and non-manufacturing sectors remain generally pessimistic, though less so than before.

The outlook for the next three months is mixed. While large manufacturers feel that conditions will either remain unchanged or improve slightly, small ones hold a dim perception. A key question is how the yen rate moves during the current quarter, April through June. The survey does not reflect the interim trading rate of ¥103 per dollar March 31 — the strongest yen value in nearly four years.

The latest tankan follows a robust annualized increase in gross domestic product of 6.4 percent in the last quarter of 2003. With the recovery lacking depth and breadth, though, conventional wisdom calls for guarded optimism at best.

The regional economy remains patently weak. Symbolic of this is the painfully slow progress in bad-debt disposal by regional and community banks. Falling land prices are another symptom of sluggish economic activity in the countryside.

Another area of concern is consumer spending, by far the largest engine of growth. To be sure, the tankan survey shows a pickup in retail sales, indicating that consumers are regaining some confidence. It is true that layoffs have slowed, reflecting gains in corporate earnings. But workers' salaries are virtually frozen, although better-off companies are plowing back some of their profits as employee bonuses. The unemployment rate — which stood at 5 percent in February — is too high; it is higher for young people.

The task for the government is to ensure that the recovery takes root across a wide spectrum of industries and in as many parts of the country as possible. One essential way to do so is to promote deregulation, a major pillar of Prime Minister Junichiro Koizumi's reform initiative. The Cabinet decision approving a three-year deregulation program beginning in fiscal 2004 represents a right step in this direction. The action plan will be carried out under the direction of two influential groups: a council of private experts and a Cabinet-level task force.

With the private sector gaining momentum, it is an opportune time to speed up regulatory reform.

The Japan Times Weekly
April 10, 2004
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      大企業非製造業の景況指数は7年4ヵ月ぶりにプラスに転じ、小企業の景況感も改善した。景気回復は力強いとはいえないが、企業収益は改善し、株価は上昇している。デフも終息していないが弱まっている。

      経済見通しは、まだ不透明である。円高で輸出関連の収益の減少が予想される。中国の輸入増大で、原料価格は上昇している。失業は高水準にあり、消費支出の見通しははっきりしない。

      大企業製造業の景況感は4四半期連続で改善した。自動車、精密機器、紙パルプ産業などで改善が著しい。

      大企業非製造業では、小売業の景況感が大幅に改善、前回短観の悲観的見通しとは様変わりしたが、小企業は製造業、非製造業とも一般的に悲観的だった。

      今四半期（4〜6月）については大企業は横ばいか、わずかな改善を予想しているが、小企業の見通しは厳しい。問題は円相場の動きだが、短観は3月31日に記録した4年ぶりの高値、1ドル103円は 考慮していない。

      03年10〜12月期のGNPは年率で6.4%拡大したが、回復に力強さがなく、景気見通しは慎重な楽観視しかできないだろう。

      地方経済の動きは弱い。地方銀行の不良債権処理は遅れており、地価も低落を続けている。

      消費支出が増加傾向を示しているとしても、労働者の給与はほとんど増えていない。失業率は2月に5%の高水準だった。

      政府は、景気回復がより広い部門、地域で確実になるようにするべきだ。そのためには、規制緩和を進めねばならない。最近、04年度に規制緩和3年計画を開始する閣議決定がされたが、正しい方向への一歩である。民間部門が景気回復へ向かっている今が規制緩和を進める時期である。