"The focus is on whether the economy will show any improvement after the election"
- Hideo Kumano, chief economist at Daiichi Life Research Institute
The sentiment of Japanese manufacturers worsened in December, as the country slipped into recession, while the global slowdown and territorial tensions with China hit the export-reliant economy. A survey made by the Bank of Japan, showed that the quarterly Tankan index for large manufacturers slumped to minus 12 this month, down from minus 3 in the prior month, reaching the lowest level in three years. As there are more pessimists than optimists, more tension is added to the situation of the BoJ, which is already under intense political pressure for bolder action. However, big manufacturers and non-manufacturers are planning to increase their capital spending by 6.8% in this fiscal year, compared to 6.4% recorded in September, a sign that the downturn may not be prolonged.
"The focus is on whether the economy will show any improvement after the election," said Hideo Kumano, chief economist at Daiichi Life Research Institute.
"Imports and production look like they are picking up overall, but it will take a while for big manufacturers' profits to pick up, thus we probably won't see a real recovery in capital spending there until after March," Mizuho Research Institute economist Haruka Kazama said.
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