World

Japan declares coronavirus emergency, approves near $1 trillion stimulus

Reuters TOKYO | Updated on April 07, 2020 Published on April 07, 2020

Japanese Prime Minister Shinzo Abe declares state of emergency during a meeting of the new coronavirus task force at the prime minister's official residence in Tokyo, Japan   -  REUTERS

The state of emergency, giving authorities more power to press people to stay at home and businesses to close, will last through May 6

Japanese Prime Minister Shinzo Abe on Tuesday declared a state of emergency to fight new coronavirus infections in major population centres and unveiled a stimulus package he described as among the world's biggest to soften the economic blow.

The state of emergency, giving authorities more power to press people to stay at home and businesses to close, will last through May 6 and be imposed in the capital, Tokyo, and six other prefectures - accounting for about 44% of Japan's population.

“The most important thing now is for each citizen to change our actions,” Abe said in televised comments made at a meeting of a government task force.

“If each of us can reduce contact with other people by at least 70%, and ideally by 80%, we should be able to see a peak in the number of infections in two weeks,” he said.

The government also approved the stimulus package worth 108 trillion yen ($990 billion) - equal to 20% of Japan's economic output - to cushion the impact of the epidemic on the world's third-largest economy.

That exceeds the equivalent of 11% of US output for the stimulus package laid out by President Donald Trump and 5% of output for Germany's package.

Direct fiscal spending amount to 39.5 trillion yen, or about 7% of the economy, more than double the amount Japan spent following the 2008 collapse of Lehman Brothers.

Japan has been spared the big outbreaks of the coronavirus seen in other global hot spots, but a recent, steady rise in infections in Tokyo, Osaka and other areas led to growing calls for Abe to announce a state of emergency.

Coronavirus infections in Tokyo more than doubled to about 1,200 in the past week, with more than 80 new ones reported on Tuesday, accounting for the highest number in the country. Nationwide, cases have climbed past 4,000 with 93 deaths as of Monday.

Abe has stressed that the state of emergency will stop short of imposing a formal lockdown as seen in other countries.

The emergency gives governors the authority to call on people to stay at home and businesses to close. With no penalties for ignoring the requests in most cases, enforcement will rely more on peer pressure and respect for authority.

Tokyo Governor Yuriko Koike said the city was in talks with the central government to decide what types of facilities it would ask to close or curtail business hours, while reiterating there would be no restrictions on buying groceries and medicine.

Sufficient food

The government would not ask rail companies to reduce the number of trains in operation, Abe said.

Other essential infrastructure like mail and utilities would operate, as will ATMs and banks, public broadcaster NHK said.

Minister of Agriculture, Forestry and Fisheries Taku Eto called on shoppers to stay calm.

“We are asking citizens to buy only what they need when they need it as there is sufficient food supply and no suspension is planned at food factories,” he told reporters earlier, adding there was no sign of disruption to Japan's grain imports.

But the restrictions will add to pains the virus is inflicting on the world's third-largest economy, which is seen as already in recession as supply chain disruptions and travel bans chill factory output and consumption.

Metropolitan Tokyo alone accounts for about 20% of Japan's overall gross domestic product.

Japan will sell a record amount of additional bonds worth more than 18 trillion yen to fund the package, adding to its huge debt which is twice the size of its economy.

While the stimulus could ease the immediate damage from the pandemic, lawmakers are already calling for even bigger spending to prevent bankruptcies and job losses.

Analysts expect the economy, which shrank in the final quarter of last year, to post two more quarters of contraction, piling pressure on the government and the central bank to do more.

“The government will probably compile another supplementary budget soon to stimulate the economy with even more spending,” said Takahide Kiuchi, a former Bank of Japan board member who is now an economist at Nomura Research Institute.

Published on April 07, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.