TOKYO -- The majority of Japanese companies CEOs expect the economy to take at least two years to recover from the fallout of the coronavirus, according to a Nikkei survey, pointing to a grim prognosis as the global pandemic shows no signs of abating.
With nearly all of the 145 companies responded resorting to telework, 40% are considering either shrinking office space or tapping share-office services, suggesting that they are bracing for a prolonged battle with the virus.
Thirty-eight percent said it will take two years before their respective markets return to pre-pandemic levels. The ratio rises to 55.8% when including respondents who predict a longer slump -- or no recovery at all.
The percentage of those predicting a down period lasting at least two years rose 12.4 points from the last poll taken in late May. Driving the deeper pessimism are the infections that continue to rise across the world.
"The second wave is certain to hit the West," said a respondent from a food company. "There are concerns about breakdowns in healthcare and part supplies."
"It will take two to three years for the pandemic to come to an end," says Toshiba President Nobuaki Kurumatani. "Japan will need to consider issuing superlong-term government bonds with maturities exceeding 50 years, says Kurumatani.
Marubeni President Masumi Kakinoki counts on a return of international cooperation to fight the disease.
"For the economy to make a full-scale recovery, it's essential for the outbreak to be contained worldwide," said Masumi.
The survey was conducted from June 30 through July 15, with respondents including presidents, CEOs and chairpersons.
If a second wave of infections were to occur in Japan, 61.4% of corporate chiefs said the subsequent emergency declaration will need to be as strict as the previous order. This camp outstrips the 28.9% of business leaders who prefer looser restrictions than before, and the 5.3% who do not want another emergency order.
Although limitations on activities would impact business, 83.4% of respondents cited the health of their employees as a pressing business concern, indicating that containing the disease has taken the highest priority.
Asked what they are doing to prepare for a second wave, with multiple responses allowed, 87.6% of corporate heads cited facilitating telework, followed by 42.1% who are overhauling supply chains, and 33.1% who are adding to cash reserves.
Regarding policies the national government should focus on, 71% of respondents named support for healthcare providers. Assistance for treatment and vaccine development for the coronavirus was also backed by 65.5%.
The government "should strike a balance between preventing an outbreak and reviving the economy to foster peace of mind among citizens," said Suntory Holdings CEO Takeshi Niinami.
Telecommuting has fully taken root in the Japanese business community, with 95.2% of corporate chiefs saying they have adopted the practice. Furthermore, 37.9% of respondents said they are looking at shrinking office space. The use of shared office spaces garnered a 34.5% response rate.
The biggest issue concerning remote work is the absence of face-to-face meeting, as reported by 75.2%. Communication problems between employees came in next at 70.3%, followed by 58.6% citing the challenges of evaluating results.
Japanese businesses have traditionally avoided hiring people for specific jobs, instead opting to flexibility to easily transfer staff for various positions. In the survey, 40.7% of respondents said they have introduced such a system or are considering doing so.