People walk at Shibuya Station in Tokyo, Japan, January 9, 2021.
Du Xiaoyi | Xinhua via Getty
SINGAPORE – Japan’s latest state of emergency in parts of the country is unlikely to take a major toll on the economy, economists said.
“The economic impact of the announced measures will be smaller compared to the previous installment,” Shigeto Nagai, chief of Japanese economics at Oxford Economics research firm, told CNBC in an email.
He was referring to Japan’s nationwide state of emergency declared in April 2020, in the early days of the coronavirus pandemic. The state of emergency ended in late May.
This latest state of emergency in Tokyo, Saitama, Chiba and Kanagawa until February 7 was announced by Japanese Prime Minister Yoshihide Suga last week, in an effort to combat the latest wave of coronavirus infections.
The state of emergency will be expanded to more areas, with local media reports that Suga will add seven more prefectures, including Osaka.
According to data from public broadcaster NHK, Japan has registered more than 298,000 confirmed Covid-19 infections, while at least 4,192 lives have been claimed from the disease.
Limited impact on Japan
Nagai of Oxford Economics cited several factors to explain the limited economic impact, including business restrictions that mainly apply only to restaurants and bars in the areas of emergency.
According to Suga’s announcement last week, the opening hours of food and beverage outlets in those areas will be shortened. People are also discouraged from going out after 8pm for non-essential, non-urgent reasons.
The number of people traveling to their workplace will also be reduced by 70% – through telecommuting. However, schools and kindergartens are not closed this time.
Capital Economics Senior Japan Economist Marcel Thieliant told CNBC: “The restrictions are very mild and mainly affect dining out and entertainment, which together account for about 3% of GDP.”
“As the state of emergency lasts only one month, the expansion into the Kansai region will not result in a resistance of more than 0.1% of GDP,” said Thieliant, referring to the latest emergency measures that are reported to be expanded. to more areas.
“We still think the state of emergency will be extended nationwide and made more draconian, prompting stores and restaurants to close altogether,” he said, adding that Capital Economics expects consumption to drop by 1.5 in the first quarter. % will fall on a quarterly basis. quarter when that happens.
Suga’s Political Future
Japan’s handling of the Covid-19 situation could affect the re-election chances of Suga, who took over as prime minister last year after the unexpected resignation of his predecessor Shinzo Abe due to health concerns.
Nagai of Oxford Economics warned that Suga – whose approval score has “already declined sharply in recent weeks” – will take a “serious blow” if the state of emergency is unsuccessful and has to be extended beyond a month.
“In addition to a series of political scandals, (Suga’s) lack of leadership in dealing with Covid-19 has been heavily criticized,” Nagai said. “The only chance to hold a lower house election is sometime in the fall after the Olympics, and the (Liberal Democratic Party) may look for another leader to win the election.”