OYAMA, Japan, July 23 (Reuters) - Corporate Japan's top leaders were in an upbeat and confident mood at their annual summer forum at the foot of Mt. Fuji, bolstered by an economic recovery and rising profits.
The heads of global players such as Toyota Motor Corp. , Sony Corp. and some two dozen others gathered at a resort near Japan's most famous mountain on Thursday and Friday to exchange views on economic and political issues.
Views differed as to whether they will come back next year with the same happy faces, but all agreed that the Chinese and U.S. economies will be the deciding factors.
"First, exports pulled the economy, then came capital expenditure, and now personal consumption is kicking in. Hot weather is helping, too," said Yoichi Morishita, chairman of Panasonic brand maker Matsushita Electric Industrial Co. Ltd. .
"But I feel we are getting closer to a peak although the timing largely depends on Chinese and U.S. economy. Exports might be getting into an adjustment phase soon, especially exports to China. Given the situation, the economy might peak in the July-September period," Morishita said.
Supported by rising exports and a pickup in capital spending and personal consumption, Japan's economy grew at an annualised pace of 6.1 percent in the January-March quarter, its best showing in more than a decade.
The government on Wednesday almost doubled its economic growth forecast for the fiscal year to next March to 3.5 percent, bringing its view more into line with the market consensus.
Demand for electronics goods such as flat-screen televisions and DVD recorders is surging as consumers in Japan and overseas get ready for the Olympic Games next month, pushing up sales at firms like Matsushita.
CAUTION
A heatwave that pushed temperatures in the Japanese capital to record highs has also helped, pushing up sales of air conditioners after cool wet weather a year earlier.
However, there is growing caution over the sustainability of the pace of growth, especially as the Chinese government's efforts this year to cool its economy are eventually likely to take their toll on Japanese exports, notably in capital goods.
Japan imports more from China than anywhere else, and China is Japan's second-largest export market after the United States.
Nevertheless, executives were determined to enjoy the good times while they last.
"The atmosphere here is much better this time around. Just last year, there was a lack of confidence," said Etsuhiko Shoyama, chief executive of Hitachi Ltd. , Japan's largest electronics conglomerate.
Upbeat comments on earnings outlooks also abounded at the forum.
Takeda Pharmaceutical Co. Ltd. , Japan's biggest drug maker, said it expected to post a rise in operating profit in the year to next March rather than the fall it forecast in May.
Toshiba Corp. , Japan's second-largest electronics conglomerate, said operating profit in its chip division is likely to beat its own forecast of 110 billion yen ($1 billion) this business year.
"We are expecting earnings growth of some 10 percent this year. I can literally feel the economic recovery," said Fujio Mitarai, Chief Executive of Canon Inc. , Japan's largest maker of office equipment.
Canon, also the world's second best-selling digital camera brand, expects its net profit in calendar 2004 to rise 12 percent to 309 billion yen.
"I personally believe we can enjoy a strong economy until the end of the next year," Mitarai said. ($1=109.67 Yen)