Japan Inc. is piling up record levels of cash, bucking Prime Minister Shinzo Abe’s calls to plow more resources into reviving the world’s third-biggest economy.
Corporate cash and deposits rose 3.6 percent in March from a year earlier to 241 trillion yen ($1.96 trillion), the highest ever and a 26th straight quarter of increase, the Bank of Japan said on Monday.
Reluctance to shift capital from safe assets into fresh investment and higher wages is challenging Abe’s effort to sustain a recovery that is showing signs of slowing. Industrial production dropped more than forecast in May, data on Monday showed, at a time when global uncertainty is increasing with a slowdown in China and financial turmoil in Greece.
“Companies haven’t changed their conservative stance,” said Ko Nakayama, head of economic statistics division at the BOJ. “It would be nice if companies use their cash and deposits for business investment.”
Capital expenditure remains below levels seen before the global financial crisis, while wages are failing to keep up with rising costs of living. Boosting investment is the key to raising Japan’s productivity, Abe said in a speech to business leaders earlier this month.