Japanese Executives More Upbeat Despite Market Turmoil

Welcome news after a slew of gloomy data

For the first time in a year, Japan's top executives have become more confident a survey showed on Sept. 20, providing some welcome good news on Asia's largest economy after a slew of gloomy data. The government said its index of business confidence among large Japanese companies rebounded to 6.2% in the three months to September from minus 0.9% in the previous quarter.

Analysts gave the rebound a cautious welcome, noting that the survey was taken after credit turmoil erupted on global financial markets due to the fallout from rising defaults in U.S. subprime mortgages to risky borrowers. But they said that the central bank's survey of business confidence, known as the Tankan, which is more closely watched, may still reveal a weakening of business confidence next month as the index is calculated differently.

The finance ministry said it was unclear whether the subprime loan problems and the stronger yen had affected the result of its survey. "We think that the underlying solid trend in the corporate sector is intact, given increased shortage in labor and the fact that companies still see profit growth," a ministry official said.

Japan's combined capital investment is now expected to expand by 1.5% in 2007, less than half the 3.3% rise predicted in the previous survey, the finance ministry said.

Copyright Agence France-Presse, 2007

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