Japanese Business Confidence Surges, Economists Remain Sceptical

The mood among big Japanese business houses improved despite recent data which showed that the recovery in the economy might be stalling. According to a recent survey released by the Bank of Japan it was reported today that business confidence among business owners jumped to 15 in June as compared to a reading of 12 in the previous month. It was also reported that large business houses plan on increasing their capital investment by 9.3 percent as compared to a reading of 1.2 percent in March. The survey is a clear indication of the pick up in business confidence which many analysts believe is a huge positive for the Japanese economy.

It is important to state that lower than expected export growth and corporate investment have stunned economic growth  during the second quarter after growing at a robust pace of 3.9 percent during the first quarter of the year. Many economists believe that the economy might have contracted during the second quarter of the year which is being seen as a huge negative. Many analysts believe that the report should be taken with a pinch of salt as these are mere projections and do not mean actual investments in the coming quarters.

Economists believe that the sharp slowdown in consumer spending is a huge negative for the economy. The stronger yen would hugely impact the export growth in the economy in the coming quarters and therefore analysts believe that the second quarter would contract. It is imperative to state that the Bank of Japan has decided to continue with its massive liquidity measures to kickstart growth in the economy and bring inflation towards its set targets of 2 percent. The Japanese economy has been in a deflationary spiral for the last two decades which has impacted growth in the economy.