Main Street Japan Sees Worst Outlook Since Financial Crisis
Main Street Japan Sees Worst Outlook Since Financial Crisis
(Bloomberg) -- Japanese merchants said they’re facing the toughest economic environment since the global financial crisis as the country braces for the full impact of the spreading coronavirus.
Store managers, barbers, taxi drivers and others who deal directly with Japanese consumers haven’t been this pessimistic about their prospects since 2009, according to a Cabinet Office survey Monday. An index measuring people’s outlook dropped more than 17 points to 24.6.
The Economy Watcher’s survey is one of the first consumer data points released by the Japanese government each month, so it gives a first glimpse of how people on the ground are responding to the fast-moving impact of the coronavirus.
And the situation is likely to have gotten worse since the survey was taken at the end of last month. Major department stores are reporting double-digit sales drops and a surging yen is likely to weigh heavily on confidence and exporter profits going forward.
A separate report Monday showed bankruptcies jumped 11% from a year earlier in February, with at least one coronavirus-related case recorded, according to Tokyo Shoko Research. Japanese business failures have increased by double-digits three months running.
A growing number of economists now expect the economy to contract more than 2% this quarter following its worst contraction in more than five years in the quarter before that, tipping the country into a recession that could be deep and protracted.
What Bloomberg’s Economist Says
“The further deterioration in the survey for outlook suggests respondents in Japan’s main street think the economic impact of the coronavirus outbreak may persist for at least two to three months, boding ill for growth in the quarters ahead.”
--Yuki Masujima, economist
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To contact the reporter on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net
To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Jason Clenfield
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