Economic Outlook Turns Sour After Tankan Report's Release
May 10, 2011
TOKYO -- The outlook on Japan's economic prospects has turned gloomier than expected, the results of a closely watched government survey suggest, adding to fears that the country's fragile recovery is sputtering. Foreign exchange and capital markets reacted strongly to the poll, known as tankan. The dollar strengthened to 108.30 yen from Tuesday's 107.68 yen close in Tokyo after the data was released Wednesday morning, while the price of Japanese government debt rose sharply. The survey results ``suggest that the pace of the economic recovery has become very slow,'' said Dell Cheek, an economist at BZW Research Ltd.. The quarterly poll is administered by Japan's central bank and is regarded by economists and businessmen as an important short-term forecasting tool. The survey is based on responses from nearly 9,700 companies on such factors as inventory, demand for new lending, earnings outlook and investment plans. The Business Conditions Diffusion Index for manufacturers, the headline tankan indicator, fell to minus 7, down from minus 3 last quarter.
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