The Tankan survey worries Japan

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STEVE CHIOTAKIS: There's some bad news for the Japanese economy. A closely watched index of how confident businesses are feeling about the future has gotten worse for the first time in nearly two years.

From Tokyo, here's the BBC's Roland Buerk.


ROLAND BUERK: For weeks now there have been signs that Japan's economy may be shrinking. Now this quarterly business survey -- known as the Tankan survey -- has added to the gloom. More big manufacturers are feeling pessimistic about their future and smaller companies are bracing for tougher times ahead. Earlier this week the government announced a cut in corporation tax to try and help business. Japan has one of the world's highest corporate tax rates -- and economist Naomi Fink from Bank of Tokyo Mitsubishi UFJ says more needs to be done.

NAOMI FINK: The corporation tax cut is a step in the right direction. There has to be a comprehensive package that takes into account the necessary reform that must take place in Japan structurally so productivity will rise and thus enhance growth.

Prices in Japan have been falling for nearly two years. That's given investors a worrisome case of deja vu. Deflation curbed economic growth in the country in the 1990s. And as the world recovers from the global recession, Japan was hoping to avoid losing another decade.

In Tokyo, I'm the BBC's Roland Buerk, for Marketplace

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