Japan firms see deflation, slow growth -Reuters Survey

TOKYO, Jan 25 - Half of Japanese firms expect domestic goods and services prices to fall for the next six months, a Reuters survey showed on Monday, as weak demand pushes the economy further into deflation.

Japanese companies are also pessimistic on the the outlook for growth, with 70 percent of firms saying they expect gross domestic product growth to range from zero to 1 percent for the next five years because of a rapidly ageing population, according to the survey.

The Bank of Japan, which began a two-day monetary policy meeting on Monday, has recently stepped up its efforts to battle the country's second bout of deflation in a decade, so economists expect the central bank to hold off on announcing new measures. [ID:nTOE60K08G]

The Reuters survey on prices and growth expectations in January covers 400 companies, of which 222 firms replied. It was taken in conjunction with the Reuters tankan, which showed that Japanese manufacturers' confidence has recovered to its highest level since the global financial crisis hit, but remains weak overall due to deflation and sluggish domestic demand. [ID:nTKC005689] (Reporting by Mari Terawaki. Writing by Stanley White; Editing by Joseph Radford)