Recent Trends in Business Fixed Investment and the Issues Attending a Full Recovery: Restoring Firms' Capacity to Generate Capital Investment

Research and Statistics Department
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Research and Statistics Department: Bank of Japan

No 2003-09-12, Bank of Japan Research Papers from Bank of Japan

Abstract: A glance at recent trends in business fixed investment reveals that, after suffering substantial reductions in 2001, investment has stopped declining and seems to be bottoming out, on the back of increases in exports and corporate profits in 2001. Assuming that the recovery in overseas economies becomes more definite, we can now look forward to these increases in exports and production becoming gradually more firmly entrenched, bringing capital spending back on line for recovery. According to the Tankan, if we look at large businesses' fixed investment plans by fiscal year, we see that, although extensive reductions were the likely results in fiscal 2002, in fiscal 2003 manufacturers are planning to increase investment, albeit only slightly, while in nominal terms the overall amount of investment seems set at least to level out. Turning to individual sectors, there has been a halt in the decline in the electrical machinery sector, which gives an indication of trends in investment aimed at expansion of the capacity of liquid crystal and electronic devices, while in both the steel and chemical sectors there are plans to increase investment.

Date: 2003-09-12
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