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Eye On Asia | Will the coronavirus pandemic derail Japan’s economy as it extends emergency measures?
- Not only will the restrictions on person-to-person contact shrink domestic consumer spending, but Covid-19’s impact on Japan’s trading partners will also hit exports hard
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With Japan extending its state of emergency till May 31, it seems that the country is preparing for the long haul in its fight against the coronavirus pandemic.
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Initially, Prime Minister Shinzo Abe had declared a state of emergency to cover seven prefectures on April 7, extending it to the entire country on April 16, in a move to cut down on the movement of people during the “golden week” holidays.
Japan’s fight against Covid-19 got off to a slow start: the country had initially only barred the entry of Chinese nationals with passports issued in Hubei province and foreigners who had visited Hubei in the two weeks before they planned to enter Japan. Moreover, Japan’s handling of the coronavirus cases on board the Diamond Princess cruise ship, which had docked at Yokohama port, left much to be desired.
Another issue that loomed large was the 2020 Tokyo Olympics, but once the International Olympic Committee decided to postpone the games to July next year, the decks were cleared for a more robust response.
Now that this stronger response is here, what does it mean for the Japanese economy?
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A study by Nikkei indicated that Japan’s economy could shrink by an annualised 21.7 per cent in the April-June quarter, its worst performance in the post-World War II period. Earlier, the government had launched a stimulus package worth nearly 108 trillion yen (US$989 billion) and equivalent to almost 20 per cent of its gross domestic product.
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