According to Nikkei Shibun's latest cross-sector survey of businesses (known as the Nikkei DI), things aren't looking too rosy for the Japanese economy in the short run. The survey showed that just 10% of respondents felt that the current business environment is "good."
A number of factors are coming together to shake commercial confidence. Among these:
Japan's pension debacle
In a mind-boggling display of (insert your own descriptor), the Japanese government has lost track of the pension records of over 60 million Japanese citizens. A huge portion of the population is concerned whether they're ever going to see the money they paid into the system and this worry is cramping the commercial sector as well.
America's sub-prime loan crisis
American companies and consumers aren't the only ones wringing their hands over this fiasco. The problem is reverberating through economies worldwide.
Fuel price increases
Increased demand from quickly growing economies like China's combined with uncertainties linked to the war in Iraq have resulted in record-breaking oil prices. Since Japan is an island nation with few resources, the country relies very heavily on imports of everything from industrial materials to foodstuffs—all of which must be transported to Japan in ships that burn a lot of expensive fuel.
Food prices
Together with skyrocketing fuel costs, Japan has begun to see disturbing increases in food prices. Since food accounts for a large portion of consumer budgets, economic issues are on people's minds every day. The result? More people are cutting down on purchases and scouting out special sales.
What's more, negative sentiment is consistent across most sectors—from department stores, supermarkets and convenience stores, to autos, restaurants and health and wellness businesses.
Running contrary to this were only a couple of industries, most evidently represented by travel and transport, which together felt more positive than negative about today's conditions and those in the coming three months.
