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80% of major Japanese firms expect economy to grow in 2018: survey

This May 9, 2018 photo shows a Toyopet dealership for Toyota vehicles in Tokyo's Shibaura district. (Kyodo)

TOKYO (Kyodo) -- Over 80 percent of major Japanese companies expect the country's economy to grow toward the end of this year but most of them do not see the growth lasting beyond the 2020 Tokyo Olympics and Paralympics, according to a recent Kyodo News survey.

Some 82 percent of 113 companies surveyed in July, including Toyota Motor Corp. and Sony Corp., said the economy will expand or expand moderately in 2018, citing increasing corporate investment and improving personal spending, despite uncertainties stoked by U.S. President Donald Trump's "America First" trade policy.

The upbeat outlook comes with the Japanese economy in its second-longest expansion cycle in the postwar period, since December 2012.

Asked about the economy after the 2020 Tokyo Olympics, 50 percent expect it to level off, and 22 percent predict a slowdown. Only 18 percent expect an expansion.

The survey also showed the companies' wariness over rising protectionist moves in global trade such as the raising of tariffs on steel and aluminum imports by the Trump administration implemented earlier this year as well as the U.S.-China trade disputes and possible hikes in tariffs on U.S. imports of cars and auto parts.

Some 21 percent of the companies said their earnings would be affected, while 34 percent said they have concerns despite the absence of any tangible impact on their businesses so far. Fifteen percent said they see little or no impact.

Prime Minister Shinzo Abe's "Abenomics" policy -- centered on bold monetary easing by the Bank of Japan and fiscal spending -- is welcomed by 55 percent of the companies, with 4 percent saying they are against it.

His administration's policy mix was introduced in 2012 in a bid to beat chronic deflation and achieve sustainable growth.

Asked in a multiple-choice question which government policies the companies are pinning their hopes on, 45 percent chose regulatory reforms and 42 percent picked promotion of free trade agreements.

Japan and the European Union signed a free trade agreement in July, while the Trans-Pacific Partnership deal grouping Japan and 10 other Pacific Rim countries is expected to take effect early next year.

As for concerns about government policies, 41 percent picked fiscal rehabilitation and 35 percent chose social security reforms.

Japan faces the urgent task of restoring its fiscal health to cope with the population's further aging and a consequent increase in pension and medical costs.

To increase tax revenue, the government plans a hike of consumption tax to 10 percent from the current 8 percent in October 2019. Some 53 percent of the surveyed companies were in favor of the planned hike and only 1 percent against.

But 27 percent said they were neither for nor against the consumption tax increase, with a number of them saying that the government should carefully consider when to raise the tax. Some 19 percent did not answer.

Of the polled companies, 53 percent said they are experiencing a shortage of labor, while 44 percent said they are not.

Asked about ways to address the labor crunch, 61 percent chose the use of artificial intelligence and introduction of other technology, 58 percent selected female empowerment and 15 percent backed the hiring of more foreign workers.

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