About 75 percent of the Japanese companies think the economy will stagnate during the next months, while 12 percent expect it to fall back to recession, according to a Reuters survey among 250 big firms.
Almost 70 percent of the companies fear the effect of the public debt crisis in Europe over the world economy, which can in turn affect sales of the export-led Japanese economy.
Only 11 per cent of companies think that external demand could top pre-disaster levels. The percentage was higher last month, when 14 percent showed optimism for export recovery after the quake and tsunami that hit the country in March.
The Reuters Tankan survey collected data between September 26 and October 7.
"Everyone is mindful of the risk of Europe’s debt crisis turning into a Lehman-like shock, which could trigger a credit crunch by making it harder for companies to raise funds and tap demand," Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute, explained.
Another big worry of the companies is the strong yen. "We are concerned that sudden rises in the yen would cause our sales to decline and profits to deteriorate," said a machinery maker who took part in the survey.