TOKYO (Kyodo) -- Nearly 80 percent of major Japanese firms expect the domestic economy to continue growing in 2025, remaining optimistic on the progress of wage hikes and a recovery in consumer spending, a Kyodo News survey showed Friday.

In the survey of 114 companies conducted between late November and mid-December, 78 percent said they expect moderate growth, compared with 73 percent that had predicted expansion or moderate expansion a year earlier.

In a multiple-choice questionnaire asking why the companies expect growth, the most commonly cited reasons were recovery in individual consumption at 88 percent, followed by rising wages at 81 percent.

Meanwhile, 16 percent of companies expect Japan's economy to remain flat, while 2 percent said it will contract moderately, highlighting lingering concerns over the impact of rising prices.

Wage growth that outpaces inflation is essential for sustainable growth in the economy, particularly as the country faces an increasingly dire labor shortage.

Of the respondents, 46 percent said they are either considering or planning pay hikes in 2025, while 45 percent were still undecided.

During Donald Trump's first U.S. presidential term from 2017 to 2021, trade frictions with China and tariff increases caused significant disruptions in the global economy.

When asked about the potential business impact of a second Trump presidency, 13 percent of firms said it would likely be negative, while 3 percent said it would lean toward being positive. Around a third were uncertain.

The most commonly cited concerns regarding Trump's policies were tariffs at 65 percent, followed by energy and environmental policies at 50 percent, and economic security policies toward China at 46 percent.