World

Rush for masks, toilet paper slows Japan's household spending

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

File photo   -  Reuters

Household spending slid 0.3 per cent in February from a year earlier

Japan's consumer spending fell in February but at a slower-than-expected pace as households scrambled for protective masks, toilet paper and staple food amid the worsening coronavirus pandemic.

But spending on travel and entertainment slumped, government data showed on Tuesday, a sign households were cutting back on non-essential purchases even before travel bans and social distancing policies took effect in March.

Analysts expect the hit to consumption from the pandemic to deepen significantly in coming months, as Prime Minister Shinzo Abe declares a state of emergency on Tuesday that is likely to paralyse activity in major cities, including Tokyo, for a month.

“This pandemic is an unprecedented type of economic crisis that deals an immediate blow to consumption and jobs,” said Yasuhide Yajima, chief economist at NLI Research Institute.

“We'll likely see a freefall in consumption in March and beyond of a scale never experienced before. In a crisis like this, Japan has little choice but to embark on helicopter money like other major economies,” he said.

Household spending slid 0.3 per cent in February from a year earlier, marking the fifth straight month of declines but a smaller drop than a median market forecast for a 3.9 per cent decline and the 3.9 per cent fall marked in January.

Spending on toilet paper jumped 47 per cent in February from a year earlier, while that on domestic package tours slumped 37 per cent.

Supply chain disruptions, travel bans and social distancing policies triggered by the pandemic have hit Japan's economy, which is already on the brink of recession, piling pressure on policymakers to take stronger steps to ease the pain.

Abe said on Tuesday the government's stimulus package to combat the pandemic would be among the world's biggest and would include direct fiscal spending of $358 billion.

It was the first time the premier unveiled the size of direct spending of his package, which he said would total 108 trillion yen - equal to 20 per cent of economic output.

The 39-trillion-yen ($358 billion) in spending would be more than double what Japan spent to deal with the hit to growth from the collapse of Lehman Brothers in 2008.

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.

With the government set to boost bond issuance to pay for the package, the Bank of Japan could ramp up bond buying to keep borrowing costs low, said Yajima of NLI Research Institute.

Analysts expect Japan's economy, which shrank in the final quarter of last year, to post two more quarters of contraction as the pain from the pandemic deepens.

Separate data showed inflated-adjusted real wages rose for a second straight month in February, providing some relief for an economy under threat of a deep downturn over the pandemic.

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.