Major Companies Cautious on 2023 Growth Amid COVID-19

Major Companies Cautious on 2023 Growth Amid COVID-19

Kyodo News conducts a survey, which shows that only about half of major Japanese companies anticipate the country’s economy to grow in 2023.

The survey includes 117 companies, such as Toyota and SoftBank, that reveals that 65 firms or 56% expect moderate or solid expansion in Japan’s economy in the coming year, marking a significant decrease from the 84% that predicted growth a year earlier.

The overall percentage of firms forecasting growth is at its second lowest in 10 years. The survey also finds that 92% of companies that expect growth cite a recovery in consumer spending after the COVID-19 pandemic as the reason for their optimism.

On the other hand, 70% of companies that do not expect growth cite rising prices of natural resources and raw materials, while 45% blame sluggish personal consumption. 40% also blame slowdowns in the US and China as factors affecting their outlook.

The survey also shows that 36% of firms plan to or are considering raising salaries, while 48% are undecided.

2023 Growth vs 2022

Among non-manufacturing companies, the largest group called for government measures to address declining birthrates, support childrearing, and address rising prices of daily goods. 

In relation to declining birth rates, the number of babies born in Japan is expected to reach a record low for the seventh consecutive year in 2022, falling below 800,000 for the first time since records began in 1899, according to data from the health ministry.

The prolonged COVID-19 pandemic has caused women to delay pregnancy plans due to economic and health concerns, leading to a 4.8% decrease in births from January to October 2021 compared to the same period the previous year, totaling 669,871. If trends continue, the annual total of newborns in Japan is projected to reach around 770,000, compared to 811,604 in 2020.

The decline in the number of babies being born in Japan is happening faster than the government anticipated. In 2017, the National Institute of Population and Social Security Research predicted that there would be around 850,000 births in 2022, falling below 800,000 in 2030. The decreasing number of births in Japan’s aging society could have a negative impact on the funding of social security programs, such as pensions and healthcare for the elderly. 

Job security

According to a white paper on the declining birth rate released by the Cabinet Office in June 2022, the spread of COVID-19 led to a decrease in the number of marriages and pregnancies. Additionally, people in their 20s and 30s, who are facing concerns about job security and income due to the pandemic, are reportedly less optimistic about starting families than they were prior to the outbreak. 

The number of births in Japan has been decreasing since peaking at around 2.09 million in 1973 during the country’s second baby boom. It fell to 1.5 million in 1984 and dropped below 1 million in 2016. Japan’s total fertility rate, or the average number of children a woman will have in her lifetime, was 1.30 in 2021, down 0.03 percentage points from the previous year, marking the sixth consecutive annual decline. (636 words)