According to a report from Kyodo News, approximately 70% of large companies are worried about the impact of yen depreciation and inflation, predicting that economic growth by 2025 may not reach 80% of last year’s forecast. The depreciation of the yen could lead to higher import costs, pushing up product prices and exacerbating inflationary pressures. Additionally, rising raw material prices and global supply chain instability are adding uncertainty for businesses.
A survey of 111 leading companies found that while the majority (72%) remain optimistic about the economic outlook, expecting stable or moderate growth and anticipating a recovery in the consumer market, this optimism has declined compared to last summer, dropping from 82% to 72%. Notably, 23% of companies have adopted more conservative forecasts, believing the economy will either maintain the status quo or slightly slow down, indicating a more cautious economic outlook. Regardless of their outlook, many companies are developing corresponding strategies, such as increasing R&D investment to promote innovation or establishing more flexible supply chain management to cope with uncertainties.
The survey respondents generally believe that the three pillars of economic growth are the recovery of consumer spending, increased capital investment, and growth in spending by foreign tourists. Among the optimists, 64% identified reduced consumer demand as their primary concern, as it would directly impact retail sales and corporate earnings, thereby affecting the overall economic health. Additionally, nearly half of the respondents (48%) emphasized yen depreciation and inflation as the two major challenges currently faced. Yen depreciation could lead to higher prices for imported goods, raising living costs, while inflation could erode consumers’ purchasing power, both of which could pose a threat to economic stability. The public expects the government to diversify its policies, with about 35% focusing on addressing demographic issues (low birth rates and an aging population), and another 34% urgently calling for measures to mitigate the economic impact of yen depreciation and rising prices.
When planning development strategies, 58% of companies intend to keep their core business operations and resource allocations in Japan, leveraging its mature industrial base and high technological advantage. Meanwhile, 35% are optimistic about the North American market, seeking a broader consumer base, and 32% have chosen Southeast Asia as a key strategic region, attracted by its rapid economic growth and abundant human resources.
In an inflationary environment, companies should ensure price transparency, allowing consumers to understand changes in product prices, which helps build consumer trust. They also need to closely monitor shifts in consumer demand to promptly adjust their products and services. As consumer spending recovers, companies can attract more consumers by offering more appealing products and services. The implementation of these strategies could support economic growth.
