Japanese executives more gloomy as yen soars

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TOKYO, Mar 24 (AFP): Japanese business confidence slumped to the lowest level in at least four years as executives worried about a stronger yen and uncertainty over the global economy, a survey showed today.
Sentiment among large companies dropped to minus 9.3 in the three months to March, down for a second straight quarter, from plus 0.5 per cent in the previous quarter, a poll by the government showed.
The index was well below a figure of plus 2.4 predicted by respondents in the previous survey, and was the lowest since the government began compiling the data in their present form in 2004.
The index is calculated by subtracting the percentage of large firms reporting worsening business conditions from the percentage of those reporting an improvement.
Analysts said the drop in confidence resulted from the yen's surge to 12-year highs against the dollar-which is bad for exports-as well as growing worries about the US economy and soaring oil prices.
"Confidence has deteriorated considerably," owing to worries the US economy is slipping into a recession, noted Yoshikiyo Shimamine, senior economist at the Dai-ichi Life Research Institute.
Respondents expect the headline index to rebound to minus 2.3 per cent in the second quarter, and to plus 6.6 in the third.
But analysts said those hopes could be dashed if the US economic slowdown hits emerging economies that have until now supported global demand and growth.
"The optimistic outlook of executives is excessive when the mainstream view is that the US economy has already stalled and there are fears that (the problems) could spread to Asia," said Shimamine.
He said that in order for confidence to rebound as predicted, the dollar would need to recover to about 120 yen, from close to the 100 yen level at present, "which is difficult to see happening at the moment."