Tankan Data Show Weak Outlook For Economic Recovery in Japan
May 10, 2011
TOKYO -- More leading Japanese companies are pessimistic about the country's economic recovery, according to a closely-watched central bank survey released Wednesday. Results from the quarterly Bank of Japan tankan survey of business sentiment came in below forecasts and were interpreted by financial markets as a sign the BOJ will keep interest rates low in order to keep stimulating the economy. ``The latest tankan confirms that the economic recovery is losing momentum,'' said Camie Livingston, senior economist at UBS Securities Ltd. in Tokyo. The tankan's main index for major businesses -- measuring the percentage of companies saying that conditions are improving, minus the percentage saying conditions are worsening -- was minus seven. The BOJ had predicted the index would be zero. The index was at minus three in the previous survey released in June. The results spurred a rally in the U.S. dollar and Japanese government bonds, both of which would benefit from a continuation of Japan's current low interest-rate policy. But the poor outlook on the economy pushed stocks lower in Tokyo. BOJ officials said the results upheld its view that the economy is still recovering mildly. Beaton Huey, director of the bank's research and statistics department, downplayed concerns that the results could lead to a pause in the recovery. Economists said the latest data suggest that Japan's surprising annualized growth of 12.7% in the last fiscal quarter may have been an aberration and largely attributable to last September's 14.22 trillion yen (US$130 billion) fiscal stimulus package. ``The small companies haven't shown the recovery that the BOJ was hoping for,'' said Oglesby Sasaki-Jon, senior economist at CS First Boston in Tokyo.
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