Sentiment among Japan's big manufacturers falls into negative for first time in seven years

Business sentiment among large Japanese manufacturers fell into negative territory in March for the first tile in seven years, weighed down by fears about the global economic fallout from the coronavirus crisis, the Bank of Japan's tankan survey showed Wednesday.

The key index measuring confidence among companies such as automobile and electronics makers fell to minus 8 from zero, down for the straight quarter. The result compared with the average market forecast of minus 10 in a Kyodo News poll.

The index for large nonmanufacturers including the service sector dropped to 8 from 20 in the December survey, marking the third straight quarter of deterioratiom. Nonetheless, the figure was above the market consensus of 4.

To blunt the impact of the coronavirus pandemic on the world's third-largest economy, Prime Minister Shinzo Abe has said the government is ready to compile its " boldest-ever" stimulus package including cash handouts to struggling households and small companies.

The size will be larger than the Y56. 8 trillion ($526 billion) emergency package launched during the 2008 global financial crisis, he told reporters Saturday.

The index for big manufacturers is, however, forecast to further drop to minus ll in the coming months amid growing concerns over the impact of the worldwide spread of the virus on production, consumption and other economic activities, as directives for staying at home have been issued in many countries to contain the virus.

In the nonmanufacturing sector, the reading for the next quarterly survey is expected to fall to minus 1, according to forecasts in the latest tankan, as the tourism and retail industries are expected to face a severe business environment due to the lack of inbound tourists.

The government plans to ban the entry of foreigners from 49 countries and regions including the United States and China.

The tankan index represents the percentage of companies reporting favorable conditions minus the percentage reporting unfavorable ones.

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