For the fiscal year to March 2017, big manufacturers estimated a 6.3 percent rise in capital expenditure, below Reuters estimates for a 6.8 percent spike.
Small manufacturers, meanwhile, anticipated a 9 percent drop, worse than the 8.4 percent fall a Reuters poll predicted.
“We judge these capex plans as not strong, but not weak. Still, there is a downside risk of the capex plan if the manufacturers’ profits deteriorate further,” J.P. Morgan stated in a Monday report.
Corporate spending plays an essential role on Japan’s economic outlook.
Cash held by companies accounted for as much 125 percent of gross domestic product, or $ 6 trillion, explained Kotaro Tamura, Asia Fellow at the Milken Institute. This capital could help move the economy if spent, said Tamura, a former senator and parliamentary secretary in charge of economic and fiscal policy at Japan’s Cabinet Office.
Prime Minister Shinzo Abe’s administration has been increasingly pushing the corporate sector to invest in technology development or increase employee compensation, Tamura noted, in a bid to fire economic growth.
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