Brexit Survey: What do Japanese Firms Say?

June 29, 2016


The Nikkei Asian Review reports:

"A majority of Japan's prominent business leaders expect Europe's economy to worsen over the next six months following the UK's vote last week to leave the European Union, a Nikkei survey shows.

"The poll, conducted Monday with presidents and chairmen of 123 major Japanese corporations, found 57 top executives, or 46.3%, think the European economy will be somewhat weaker in six months while another six, or 4.9%, of these respondents predict the economy will be in worse shape. This means more than half of corporate chiefs in the survey -- 51.2% to be exact -- anticipate a deterioration in Europe's economic conditions.

"Only 5.7% of the top executives see the European economy performing mildly better over the next half year, and none predicts solid expansion. One-third of respondents expect economic conditions in Europe to change little in six months, while the remaining 9.8% gave no answer.

Stronger yen feared

"A weaker British pound and lower stock prices could slow down the economies in the EU and the world," said Akiyoshi Koji, president of Asahi Group Holdings. "Such a development could affect the Japanese economy."

"Nearly 88% of respondents think the UK's exit from the EU will harm their operations: 34.1% expect a negative impact while 53.7% predict the effect will be mildly negative. None of the 123 chiefs expects a positive outcome for their business.

"As for how Brexit would hurt their business, 52.8% predicted a stronger yen while 51.9% expected a global economic slowdown sparked by a slump in Europe. Nearly 40% cited a worsened U.K. or European economy. Many respondents noted possible changes in regulations and systems as well as trade tariffs.

"Just one of the 95 companies that operate or plan to set up operations in the UK said it would review business strategy for the country, while 25.3% replied that they would consider a review of their UK business strategy.

Optimism yields to concern

"In a quarterly survey released June 20 -- just days before the Brexit referendum -- 47.9% of Japanese corporate leaders forecast that Europe's economy would moderately expand and 46.6% anticipated the economy to change little. Just 5.5% thought the economy would be modestly worse. An improved European economy ranked second among replies as a factor that could bolster the global economy, behind only a U.S. economic expansion."

Source: June 28, 2016 4:45 am JST, http://asia.nikkei.com/Japan-Update/Brexit-survey-Japanese-firms-see-weaker-European-economy?page=1

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