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Tax hike run-up brings few surprises for Japanese business chiefs: survey

TOKYO -- Consumer demand leading up to next month's consumption tax hike has been generally in line with Japanese executives' expectations, according to a survey compiled by The Nikkei on Saturday.

     Of the 148 business leaders who responded, 39.9% said the last-minute surge in demand has been roughly within the scope of their assumptions. Otherwise, 25.7% said they have seen no out-of-the-ordinary demand, 10.8% said the demand has been slightly greater than expected and 1.4% said it has significantly surpassed their predictions. 

     What do corporate captains think will happen after Japan's 5% consumption tax rises to 8%? The majority, 70.2%, said there will be a sales downswing of less than 5%, or none at all, in fiscal 2014 -- through March 2015.

     In March 1997, the month before the consumption tax was raised from 3% to 5%, sales at large retailers rose 14% on the year. The next month, after the hike, they slid 8% on the year. Sales of cars and home appliances remained sluggish over a long period, exerting downward pressure on the overall economy.

     This time, the survey suggests the ups and downs in demand will be more modest, creating less economic whiplash.

     Looking ahead, 55.4% said the Japanese economy, underpinned by firm consumer spending, will improve by September -- or at least show signs of getting better by that point. An even greater proportion, 74.3%, said that will be the case by around December. The figures indicate many respondents believe any effects from the tax hike will soon pass, allowing the economy to continue on a recovery path.

     On the earnings front, 46.6% of the respondents said their operating profit/loss balance is likely to improve in fiscal 2014.



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