TOKYO (AP) — Major Japanese companies have grown more pessimistic about the economy, given higher costs and a weaker yen, according to a survey by Kyodo News.

The survey of 117 companies found just over half, or 56%, expect the economy to grow this year. That was down sharply from 84% a year earlier, said the survey released Monday.

The percentage of firms forecasting growth was at its second lowest in 10 years for the annual survey, and the companies also expressed worries about slowdowns in the United States and China in 2023.

The war in Ukraine has pushed prices of oil and other raw materials higher while at the same time the yen has weakened against the U.S. dollar, raising risks for the world’s third-largest economy.

The bleak outlook also reflects worries over a possible global recession as central banks in the U.S. and other major economies raise interest rates to counter inflation.

The dollar rose to about 150 yen at its peak last year from 115 yen at the beginning of the year. On Tuesday, it was trading at about 130 yen.

Only 3% of the companies surveyed said a weaker yen was a positive for them, with about a third saying it was a problem since it raised costs of manufacturing inputs and energy, hurting their bottom lines.

Japan’s economy shrank at a 0.8% annual rate in July-September as pandemic precautions eased in the late summer, allowing normal business activity and travel to resume. Exports expanded 2.1% in annual terms. Growth in the last fiscal year, which ended in March, was at 2.5%.

Toyota Motor Corp. was among the companies expecting a relatively good year. Like other major export manufacturers, it benefits from a cheaper yen when it repatriates profits earned overseas.

Energy, telecoms and technology company SoftBank Group Corp. also foresaw improvement in coming months, according to the survey, conducted from late November to mid-December.

Consumer spending has been recovering as Japan has ended restrictions on business activity to fight COVID-19 outbreaks, even as case numbers have soared in recent weeks. Most companies forecasting a positive outlook for 2023 cited that as the major reason for optimism.

About a third of the companies surveyed said they expected no major changes this year, while seven anticipated a moderate contraction.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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