Japan considers additional economic bailout measures against coronavirus – The Diplomat


Tokyo report | Economy | East Asia

A third component of incentives is being formulated to mitigate the economic fallout from the pandemic on the deterioration of the Japanese economy.

As global travel restrictions coupled with voluntary closure and self-isolation advice take hold of society, Japanese restaurants, hotels and taxis – those on the front lines of the decline in tourism – face a feeling of crisis.

In February, the number of foreign tourists entering Japan fell 58% to 1.09 million, the lowest figure since the great earthquake in eastern Japan in 2011, when tourist arrivals plummeted. by 62.5%.

Widespread cancellations of domestic and international flights have forced Japanese airlines to prepare for an expected loss of revenue of $ 2.8 billion between February and April. A drop in inbound tourism had a knock-on effect on department stores and new car sales, which fell more than 10% in February from a year earlier.

The Japanese government will lay the groundwork for a further economic stimulus package after training a panel of economists and business leaders to help mitigate the economic impact of the coronavirus pandemic. Discussions are expected to take place almost daily with new measures finalized in April. Prime Minister Shinzo Abe said the government’s priority was to maintain employment and business continuity, promising to take “drastic measures to put the Japanese economy back on track for steady growth.”

In mid-February, the first phase of the emergency measures included 500 billion yen ($ 4.5 billion) in low-interest, unsecured emergency loans for small and medium-sized businesses struggling in the region. the tourism industry. The government’s recently launched financial advisory service reported that 90 percent of calls came from small and medium-sized businesses across various industries who said they only had one month of cash left. The second round of stimulus, announced on March 10, expanded financial support to other sectors affected by the virus such as hospitality and manufacturing.

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The coronavirus pandemic has hit the world’s third-largest economy as it struggles to rebound from an unpopular 2% sales tax hike in October as well as damage from Typhoon Hagibis – the strongest typhoon to hit Japan in decades. decades. In October and December, the economy contracted at an annualized rate of 7.1% from the previous quarter, with destructive floods and high winds causing $ 10 billion in insured losses.

Abe also pledged to support parents who take a break from caring for their children during school closures, offering a daily grant of 4,100 yen while calling for deferment of utility payments by a month for low-income households.

Proposals for direct incentives to households such as cash payments or the cancellation of sales tax are under consideration, but Deputy Prime Minister Taro Aso has expressed doubts about the effectiveness of the distribution of cash and ruled out a consumer sales tax cut.

The gigantic task of pulling the economy out of the brink of recession was recognized by Economic Revitalization Minister Yasutoshi Nishimura, who said on Fuji TV that the economic impact could be worse than the 2008 financial crisis. Nishimura did. argue for the need for “bold steps that should not be limited by what has been done before”.

In Tokyo, in the midst of the daily struggle to find everyday essentials and concerns about panic buying and hoarding, the question on everyone’s mind is whether the hosting of the Olympics is a good one. idea. The Japanese government has resisted pressure to change the Olympic calendar, stressing that the Games will go “as planned”. According to SMBC Nikko Securities, if the epidemic is not brought under control, canceling the Olympics would reduce Japan’s annual GDP by about 1.4%, for a total of 7.8 trillion yen. Alternatively, hosting the Olympics without spectators would also mean losing 4.8 million tickets, which have already been sold.

On Wednesday, Aso, who is no stranger to the controversy, said the Tokyo Olympics were “doomed”. He pointed out that every 40 years, the Olympics were foiled by world events. Aso referred to when Japan hosted the 1940 Summer and Winter Olympics, which were suppressed due to World War II. The 1980 Moscow Olympics are also remembered for the US-led boycott in protest against the Soviet Union’s invasion of Afghanistan, which saw 65 nations refuse to participate in the tournament.

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