Japanese business confidence at two-year high

Image caption,
Japanese firms appear confident of boosting the country's recovery

Japanese business confidence has hit its highest level in two years, a central bank survey suggests.

The closely watched Tankan survey of more than 11,000 manufacturers found that optimists about Japan's economy outweighed pessimists for the first time since June 2008.

Firms predicted rising profits and increased investment.

It comes as the world's second-largest economy battles to recover from its worst slump in decades.

The survey rose for a fifth consecutive quarter to one point in June from minus 14 in March, beating analyst forecast.

Tackling debt

However, the outlook for the Japanese economy remains uncertain.

Last month, Japan's new prime minister said the country was at "risk of collapse" under its huge debts.

Naoto Kan, in his first major speech since taking over, said Japan needed a financial restructuring to avert a Greece-style crisis.

Japan's central bank has announced a scheme to offer 3 trillion yen (£22bn; $33bn) in low interest loans in an effort to spur economic growth.

And it has set targets to rein in its national debt, the biggest in the industrialised world.

However, the government has given no specific ideas of how it will reach its long-term goal of balancing its budget.

Strong demand from Asia has meant that, so far at least, demand for Japanese exports has been recovering, despite weakness in other markets such as Europe and the US.

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