Recently, business sentiment in Japan and China has shown significant improvements, according to new data. In Japan, the Tankan index from the Bank of Japan indicates that optimism in the service sector has reached levels not seen in over three decades. With a reading of +34 for big non-manufacturers, this is the highest level since the summer of 1991. The surge in tourist numbers and profits from price hikes have contributed to this positive outlook. However, despite this encouraging news, the manufacturing sector remains less optimistic, with the index dropping to +11 in March.
Meanwhile, China has also witnessed a boost in business confidence. In March, confidence reached an 11-month high, while manufacturing activity expanded at its fastest pace in 13 months. The driving force behind this growth is rising overseas demand as indicated by the latest Purchasing Managers’ Index. Additionally, better-than-expected export and retail sales figures have added to China’s positive economic outlook for 2021.
While both countries are experiencing positive indicators for their respective economies, challenges persist. In China’s case, the property sector is facing turmoil and could negatively impact economic growth. Many economists believe that Beijing may need to implement more stimulus measures to achieve their target of around 5% growth this year. Despite these obstacles, the improving business sentiment suggests a promising start to the year for both Japan and China’s economies.
