Closed restaurants in Tokyo’s Shibuya district, January 8. Pubs and eateries are one of the businesses hit hardest by the guidelines.
Photographer: Kentaro Takahashi / Bloomberg
Photographer: Kentaro Takahashi / Bloomberg
Japanese Prime Minister Yoshihide Suga this week looks set to expand a state of emergency for major metro areas that will hurt the economy more, as he tries to curb Covid-19 affairs and stem a drop in public support.
In addition, parliament is expected to vote on Monday on measures to add teeth to the emergency orders, including fines for pubs and restaurants challenging the current voluntary guidelines to close by 20:00
The emergency, which includes 11 areas including Tokyo, Osaka and Nagoya, helped stop a rapid acceleration of virus cases, which set records in early January and raised concerns among the developed world’s oldest population. Although the number of infections has decreased since then, Suga’s government has said they are still alarmingly high.
Suga plans to extend the state of emergency by about one month after the February 7 deadline and the possible removal of Tochigi prefecture from the list as the situation improves according to local media. reports. The broadcaster FNN said that the announcement could come as early as Monday.
The current measures in Japan that also seek people to work from home are much less stringent and enforceable than the lockdown of some European countries. But they have already caused a sea change, according to economists. Instead of the year starting with a slow recovery, some of them are now seeing a double-digit contraction.
Japan eruptions make Suga look more like short-term prime minister
The prime minister, who is in danger of being replaced by the ruling party ahead of an election to be held in October, has seen his support shift since taking office about four months ago. Critics argue that its focus on boosting the economy has slowed efforts to stem infections. Now he is sitting with the expansion of the need of businesses to control the virus, to aggravate his leadership and keep him alive hope of the Summer Olympics.
Trending Down
Covid cases in Tokyo begin to decline during an emergency
Source: Tokyo Metropolitan Government
“The damage to businesses would be huge,” said Mamoru Sugiyama, owner of the sushi restaurant, referring to an expansion. Pubs and eateries are one of the businesses hit hardest by the guidelines. He has temporarily closed his restaurant, which boasts a 130-year history in the flashy Tokyo shopping center Ginza.
“Some businesses are about to use their loans, and I think if the emergency continues until February, companies could start breaking down one after the other, even in Ginza,” said Sugiyama, who also heads of a coalition of about 370 local restaurants and bars.
However, a Nikkei / TV Tokyo survey indicates public support for a longer emergency. The January 29 to 31 poll showed that 90% of respondents preferred the extension.
The government said the emergency could end when the post-phase 3 virus crisis is eased on a four-stage scale used on six data points.
In Tokyo, that would mean daily infections are down to less than 500. Tokyo reported 633 new infections on Sunday, well below the recent high of 2,477 on January 7. On January 27, the occupancy rate in the hospital was 73% and critical care according to the Ministry of Health, the units were 113% of the capacity. Both figures will have to fall below 50% to reach phase 3.
“We can see that the emergency had an impact, but it was too weak,” said Yoshihito Niki, a professor of clinical infectious diseases at Showa University’s School of Medicine in Tokyo. This indicates that it is necessary to extend the measures. “The government will have to be patient until at least February.”
The Sanjo Street Arcade in Kyoto, January 14th. The government said the emergency could end when the post-phase 3 virus crisis is eased on a four-stage scale used on six data points.
Photographer: Kosuke Okahara / Bloomberg
The Japanese parliament will this week pass two bills that impose on those who do not comply with the official virus guidelines. This will include fines of to According to the website of the opposition Constitutional Democratic Party of Japan, there are 300,000 yen ($ 2,866) on bars and restaurants that do not comply with the orders to close early. A separate act to combat infectious diseases will allow fines of as much as 500,000 yen for those with Covid-19 who refuse to be admitted to hospital, or leave before being formally discharged.
Since the declaration of the emergency in early January, economists have warned that the less stringent advice compared to the first emergency in April runs the risk of being inadequate and causing more damage over time. This time, schools remained open and street traffic continued to see foot traffic, although it was smaller than during normal times, despite repeated calls from officials to stay home.
Toshihiro Nagahama, an economist at the Dai-Ichi Life Research Institute, sees an emergency extended to two months shaving about 3 billion yen out of the economy.
While the consensus among analysts is that the economy should shrink by an annualized 2.5% this quarter, economists Yoshimasa Maruyama and Koya Miyamae at SMBC Nikko Securities Inc. now see a stronger finish from 2020, which in the three months to March made a contraction of 11.5% to a contraction of 11.5%. .
Nevertheless, an unemployment rate of just 2.9% and the declining number of bankruptcies on an annual basis show that spending and loan support from the government and the Bank of Japan have so far helped dampen the economic blow of the pandemic. Suga’s administration received a third extra budget from parliament last week that provides another round of aid to businesses, medical facilities and the economy.
The concern that persists is how long companies can hang on if the emergency is extended and consumer spending remains subdued.
Yasuhide Yajima, chief economist of the NLI Research Institute, warns that there will be no dramatic revival of growth, even if the state of emergency ends, unless there is more concrete reassurance to the public.
“Regardless of the state of emergency, consumption is only going to come back before we see the impact of vaccination,” Yajima said.
– With the help of Emi Nobuhiro, Gearoid Reidy, Isabel Reynolds and Toru Fujioka
(Details of proposed fines, emergency expansion poll and GDP forecasts updated)