Top executives predict strong economy in '07

TOKYO -- Most of the top executives at 30 major companies predict that the current economic upturn will continue this year or beyond, according to The Yomiuri Shimbun's new year survey on business trends.

The boom has been the longest since the end of World War II and exceeds the previous record of 57 months during the Izanagi boom between 1965 and 1970.

Fourteen of the corporate leaders polled said the current boom will last beyond 2008, and 11 predicted it will last until the latter half of this year.

In citing up to three factors that could have a negative impact on the economy, 26 indicated a slowdown of the U.S. economy. Ten cited a drop in consumer spending and 10 cited a rise in crude oil prices. Only five pollees mentioned increased interest rates.

Twenty-two of the executives predicted the Bank of Japan will raise interest rates again sometime in the first half of this year. Their answers indicate a belief that the current economic boom will continue even with a rise in interest rates factored in.

In citing up to three policy tasks that should be top priority for the administration of Prime Minister Shinzo Abe, 19 pollees said they hoped the government work out a strategy to ensure continued economic growth.

It was followed by reviews on public pension, medical care, nursing care and social welfare in an integrated manner, cited by 17 pollees. Ten cited drastic cuts in government expenditures.

Currently, the government faces the task of securing a stable revenue source to fund a revamp of the public welfare systems, because of the graying population.

Asked whether the consumption tax rate should be raised from the current 5 percent for fiscal reconstruction and future financing of social security, 19, or 63.3 percent, said there was no choice but to hike it.

Eleven cast doubts on the Abe administration's strategy of prioritizing economic growth in light of fiscal reconstruction, saying that increased tax revenue as a result of economic growth will not be able to cover the government's fiscal deficit.

Eight said they accepted the strategy as a slogan because if the government chooses tax hikes, it could weaken motivation for cutting expenditures.

None of the surveyed executives believe increased tax revenue from economic growth can solely enable fiscal reconstruction.