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Japan firms brace for further COVID hit amid fears of new wave of infections - Reuters poll

EconomyApr 18, 2021 08:05PM ET
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© Reuters. FILE PHOTO: A businessman and office buildings are reflected on an electronic board showing a graph of the Japanese yen's exchange rate against the U.S. dollar outside a brokerage in Tokyo

By Tetsushi Kajimoto

TOKYO (Reuters) - Japanese companies think the country will suffer a fourth round of coronavirus infections, with many bracing for a further blow to business, a Reuters monthly poll showed.

Japan has so far seen far fewer COVID-19 cases than many Western countries, but concerns about a new wave of infections are rising fast.

A delay in vaccinations versus other Group of Seven advanced countries and a lacking sense of crisis among the public will trigger a new wave of infections, some firms wrote in the poll.

The Corporate Survey found almost all Japanese companies anticipated a new wave of infections in Japan. Many expected it to peak in May, around the time of the Golden Week holidays, which would diminish hope for a domestic demand-led recovery.

If the new wave of infections led Prime Minister Yoshihide Suga's government to issue a fresh state of emergency, which entails business restrictions and penalty, that would hurt sales at 59% of firms, the April 2-13 survey found.

"Restaurant and tourism industries have been so exhausted that I'm concerned a new wave of infections will deal a body blow," a chemicals maker manager wrote in the survey.

A wholesaler said a new wave of infections and a state of emergency would make companies more cautious about spending and output.

The survey, which was conducted for Reuters by Nikkei Research, canvassed 482 large and midsize non-financial Japanese corporations on condition of anonymity so that they could express opinions freely. About 240 firms responded.

Although global demand and domestic consumption have helped the world's third-largest economy emerge from the slump, hardest-hit industries such as restaurants and hotels remain under pressure.

By sector, nearly two-thirds of non-manufacturers expected sales to decline further if another state of emergency was issued, with many firms at industries such as wholesale/retail, transportation/utilities and other services seeing sales drop.

Underscoring the steady job market despite the pandemic, nearly three quarters of Japanese firms saw no change to their hiring plans for the coming fiscal year starting April 2022.

About one in five would either freeze hiring or cut it in fiscal year 2022, and just one out of 10 intend to increase hiring, the survey found.

Fewer than one in 10 firms were considering layoffs.

"We had a big cut in hiring for this fiscal year. Business results remain hard to recover for the time being so we will curb hiring for the fiscal 2022 as well," a paper/pulp maker manager wrote.

Japan firms brace for further COVID hit amid fears of new wave of infections - Reuters poll
 

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