Large Japanese companies have different views on the prospects of the economy

The Bank of Japan published the results of the Tankan survey. According to the data, in December there was a decrease in the index of confidence among the largest manufacturers from 8 to 7 and an increase in the index for service sector companies. Both results were stronger than economists expected.

Oil and coal-related companies were the main reason for the fourth drop in a row for producers.

On the other hand, forecasts became better after a summer surge of coronavirus cases. Japan opened its borders to foreign tourists, which had a positive effect on the services sector, and the confidence index rose from 14 to 19.

Nobuyasu Atago, a chief economist at Ichiyoshi Securities, said that risks of slowing GDP growth in the U.S. and Europe are making manufacturers be cautious, but the service sector is experiencing a relief after the easing of Covid restrictions.

Yuki Masujima, an economist at Bloomberg Economics, expressed the view that manufacturers were affected by weak external demand. In his view, the service sector was supported by nationwide travel subsidies and the easing of restrictions on foreign tourists.