Japanese Firms Reveal a Grim Long-term Outlook -- August 2002 Nissay Business Conditions Survey

Keisho Komoto

1. Introduction

Since the early 1990s， Japan’s economy has struggled with a range of problems including persistent stagnation， declining equity and land prices， and general price deflation. If these problems persist， their impact could extend beyond the present and determine the economy’s future. Corporate managers， increasingly pessimistic about the future， may restrain spending on capital investment and research & development， thus further delaying economic recovery.

The latest Nissay Business Conditions Survey (jointly conducted by NLI Research Institute and Nippon Life Insurance Co. in August 2002， covering 2，767 companies nationwide) asked companies about their long-term (five-year) outlook for the economy and business environment， and the key business issues that lie ahead.

According to the results， the overall economic outlook for the next five years is grim， with approximately 60% of companies predicting zero or negative economic growth. This suggests that the business environment could worsen as domestic competition intensifies. Moreover， less than 20% expect Japanese firms to become more competitive， while over 60% believe that human resources management and wage systems need to be thoroughly revised.