Overseas demand for autos, IT goods and construction machinery which had long supported the overall economic activity in Japan, is now set to slow down, while input cost for Japanese companies is rising.
As Japanese companies can no longer absorb the entire negative impact of rising basic material prices with revenue growth, corporate profit trend will slow down further going forward.
The effects of the wage hikes will be minimal as companies are cutting back on the number of jobs on payrolls, relying more on part-timers.