Bank of Japan survey more optimism over economic recovery

TOKYO — Business sentiment is growing optimistic, a closely watched economic survey by the Bank of Japan showed Thursday, as the world’s third-largest economy continues to grapple with the damage from the coronavirus pandemic.

The “tankan” survey’s headline index for big manufacturers’ sentiment stood at plus 5 in March, a considerable improvement over the minus 10 marked in December, and more positive than the forecast at plus 4.

The survey’s results highlight a steady recovery over the last three quarters to levels before COVID-19 began in late 2019.

The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

Sentiment among large nonmanufacturers improved by four points to minus 1, underlying how that sector is bouncing back far slower than big manufacturers.

Naoya Oshikubo, senior economist at SuMi TRUST, or Sumitomo Mitsui Trust Asset Management, believes the recovery is slower in the service sector because of the government-backed “state of emergency” issued periodically, with the latest ending in March.

Export-led recovery is strong, while the food, travel and accommodation sectors are stalling, but the overall impact will be gentler than last years’ because the emergency only applied to some parts of Japan, Oshikubo said in his report this week.

“And, in general, people have become accustomed to COVID-19 measures,” he said.

The coronavirus sent sentiments at Japan Inc. plunging last year to levels last seen when the economy was battered by the financial crisis more than a decade ago.

Although trade and some economic activity have been recovering, income from tourism, a major driver for growth in recent years, is still squelched because of border controls.

Some 9,100 people have died from COVID-19 in Japan. The vaccine rollout has barely begun, with fewer than 1% of the population inoculated.

With cases rising recently in a “fourth wave,” worries are growing about the Tokyo Olympics, set to open in July, with tens of thousands of people, including athletes, business and government officials and media, entering the country from abroad.

Yuri Kageyama on Twitter