Around 64.5 percent of Japanese companies' overseas affiliates expect to see operating profits in 2022, bringing them almost on par with levels before the coronavirus pandemic, according to a recent survey.
While the result was almost at 2019's 65 percent, signs of long-term recovery were less promising, with just 45.4 percent of respondents saying they will expand their business in the next one to two years, down from a pre-COVID-19 48.9 percent, according to the survey by the Japan External Trade Organization.
About 60 percent of manufacturing businesses also said they planned to review their supply chains, and 57.5 percent said they will consider changing suppliers.
A majority of manufacturers cited rising costs of raw materials for the changes, with just under 50 percent also reporting they intend to do so due to the risk of supply chains being cut amid distribution instability.
"The energy situation is unstable due to Russia's invasion of Ukraine, and we cannot outline good prospects for the world economy," JETRO Chairman Nobuhiko Sasaki said at a press conference.
According to the survey released Nov. 24, 85.5 percent of companies based in South Korea expect to log profits, followed by the Netherlands at 78.9 percent, and 73.5 percent in Singapore. The corresponding figure for Indonesia was 73.2 percent, 73.0 percent in Britain, and 71.9 percent in India.
Projections in China were downbeat due to the effects of the country's strict "zero COVID" policy, JETRO said. The proportion of businesses in the country expecting to see profits were down 7.3 percentage points from last year to 64.9 percent.
In Russia, too, which has been affected by international sanctions since its invasion of Ukraine began in February, 50 percent of reporting businesses said they expect to post losses. This would be a steep rise from JETRO's 2021 survey when just 8.3 percent of businesses in the country projected the same outlook.
By sector, 79.5 percent of communications and office equipment firms said they expect to log profits, followed by financial institutions excluding banks at 76.1 percent.
Meanwhile, the poll found that respondents in hotel and travel firms were most likely to report losses, with 60.5 percent saying they did not expect to make a profit.
JETRO conducted the survey from Aug. 22 to Sept. 30. A total of 19,143 Japanese firms, branches and offices operating in 86 countries and territories were polled, with 7,173, or about 37.5 percent, giving valid responses.