Japanese Manufacturers Seem Pessimistic, Numbers Expected to Decline Further

Japanese manufacturers seem pessimistic considering the latest figures of the Bank of Japan ‘tankan’ index that was released for the December quarter. In a regular briefing, Osamu Fujimura, a government spokesman, said “It seems there has been some deterioration, especially in manufacturing, and it is expected to continue to decline.” With reading below zero indicating more manufacturers being pessimistic than optimistic, the survey’s results recorded a performance that was much worse than what was expected – with the numbers dropping from minus 3 from last quarter to minus 12 in this quarter.

It also seems likely that the central bank will consider monetary easing at its next policy meeting while the government will continue to push forward with stimulus measures too. What complicates these developments is the Parliamentary elections which are due to take place in a matter of days where the Ruling Democratic Party of Japan (DPJ) is likely to be shunned by voters who are unhappy about the party being unable to follow through with a sustainable recovery ever since the March 2011 earthquake and the tsunami.

With Shinzo Abe touted to replace Yoshihiko Noda as prime minister, he has promised to increase spending on public work which will increase demand which help the economy to break out of a cycle of falling prices as well as a drastic fall in demand. What has kept the economy down, according to experts, is both the economic recession in Europe and most recently, tensions with China slowed down exports due to issues over the disputed islands in the East China Sea.