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Last Updated:  Tuesday, 1 April, 2003, 06:17 GMT 07:17 UK
Japan's economy in more trouble
Japanese people
Gloom sets in over the economy
The Bank of Japan's quarterly survey of business sentiment shows the economy has flattened out as export growth slips.

The Tankan index fell to minus 10 in March, from minus 9 in December, the first downturn since December 2001.

"The survey overall showed the economy was levelling off," said Toshio Sumitani, economist at Tokai Tokyo Research Centre.

"What is alarming is that an improvement among large manufacturers, who had led the recent recovery of business confidence, has come to a halt," he added.

The US-led war on Iraq had little impact on expectations, though about 90% of the survey was conducted before the start of hostilities.

Export driver

Exports have been supporting the economy over past months, particularly due to strong demand for cars from the US.

The Ministry of Economy, Trade and Industry reported on Monday that industrial output in February fell a sharper than expected 1.7% from January, the largest drop since November 2001, led by falling auto exports to the US.

The weakness of the US dollar against the yen has made Japanese exports more expensive.

The Tankan quarterly survey is the Japanese central banks key source of data about business and their expectations.

The figure gives the difference between companies giving positive and negative assessments of economic conditions, while a minus figure indicating the majority consider of conditions unfavourably.

Bank of Japan holds war council
25 Mar 03  |  Business
US economy faces war jitters
28 Mar 03  |  Business

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