March 12, 2020 / 6:07 AM / 21 days ago

Japan large manufacturers' mood sours to near 9-year low from coronavirus jolt

TOKYO (Reuters) - Large Japanese manufacturers’ business sentiment fell to a near nine-year low in January-March, suggesting widening fallout of the coronavirus outbreak on an economy already struggling to keep a recovery on track.

Large manufacturers foresee conditions remaining depressed in the following quarter, the government survey compiled in February showed, adding pressure on policymakers to roll out more measures to navigate the coronavirus crisis.

The business survey index (BSI) of sentiment at large manufacturers stood at minus 17.2 in January-March, the lowest reading since April-June 2011. It compared with negative 7.8 in the prior three months.

The index, jointly compiled by the Ministry of Finance and a research arm of the Cabinet Office, is expected to jump to minus 5.5 in April-June, still hovering in contraction.

Sentiment at large Japanese manufacturers sours here

The coronavirus weighed on exports to China and inbound tourism, a government official told a news briefing. He added that surveyed firms said they were being affected by the virus, or thought they will be in the future.

Japan’s policymakers remain under pressure to support growth as a surge in the yen and fears of the impact from the coronavirus cast darkening clouds over the economic outlook.

The Bank of Japan is expected to ease monetary policy next week in an attempt to reduce the impact of the coronavirus and recent market volatility on business sentiment, sources familiar with the central bank’s thinking told Reuters on Wednesday.

The government announced this week a second package of measures worth about $4 billion in spending to tide over the impact of the virus, focusing on support for small and mid-sized firms.

The world’s third-largest economy shrank at the fastest pace in almost six years in the December quarter as a sales tax hike hit consumer and business spending, raising the risk of a recession.

Editing by Jacqueline Wong

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