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Pandemic prods Japanese firms to plan biggest capex cuts in decade The dismal reading highlights the challenge facing Japan's next prime minister, to be chosen in a ruling party leadership race next week
TOKYO (Reuters) - Japanese companies plan to make the deepest cut in capital expenditure in more than a decade this year as the coronavirus pandemic hits profits, a government survey showed, underscoring the broadening economic impact of the health crisis. The dismal reading highlights the challenge facing Japan's next prime minister, to be chosen in a ruling party leadership race next week, as policymakers try to balance the need to contain the virus and support an economy grappling with its worst postwar
recession. "Companies have little choice but to slash spending when their profit outlook is so gloomy," said Takeshi Minami, chief economist at Norinchukin Research Institute. "Japan could see more companies cut spending and jobs toward the year-end, which means it will take quite a long time for the economy to return to pre-pandemic levels," he said. Companies plan to cut capital expenditure by 6.8% in the fiscal year ending in March 2021, the quarterly survey showed on Friday, more than a 4.4% drop projected three months ago. It was the biggest proposed cut since January-March 2010, when Japanese exports were crunched by the global financial crisis...