The worldwide business slowdown is creeping into Japan where major corporations will report a drop in profits this year after several years of continuous growth, according to a newspaper survey Wednesday.
The leading economic journal Nihon Keizai Shimbun said its survey showed that major Japanese companies are expected to report a substantial decrease in profits for the fiscal year ending March 31.The report followed a government warning that the world economy is expected to worsen in the coming years, dealing a blow to developing nations suffering from the heavy external debt burden.
The government's Economic Planning Agency said in a report on the world economy released Tuesday that the worldwide slowdown has already begun, bringing down the annual growth rate from 4.1 percent in 1988 to 3.0 percent in 1989 and to an estimated 2.0 percent in 1990.
The government warned the worsening situation will be magnified by the outbreak of war in the gulf region or by a failure of the ongoing multinational negotiations for freer world trade.
Nihon Keizai said its prediction of a slowdown in Japan was based on a survey of major corporations which are listed on domestic stock exchanges.
The paper said 1,038 companies, excluding financial institutions, which have released their business results for the half-year ended Sept. 30 showed that their total pre-tax profits declined 0.7 percent from a year ago to $31.6 billion on sales of $1.079 trillion, up 9.2 percent.
Their profits for the year ending March 31 are expected to fall 2.6 percent to $65.8 billion on sales totaling $2.23 trillion, up 3.9 percent, the paper said.
The daily cited rising interest rates and crude oil prices as a result of the gulf crisis and the stock market slump as major adverse factors.