On January 9, 2021, people walk at Shibuya Station in Tokyo, Japan.
Du Xiaoyi | Xinhua via Getty
Economists told CNBC that Japan’s newly announced state of emergency in parts of the country is unlikely to cause major economic losses.
Shigeto Nagai, head of Japanese economy at Oxford Economics, a research firm, told CNBC in an email: “The economic impact of the announced measures will be less than the previous episode.”
He was referring to the Japanese national emergency declared in April 2020 at the beginning of the coronavirus pandemic. The state of emergency at that time ended in late May.
Japanese Prime Minister Yoshihide Suga announced last week that until February 7, the latest state of emergency in Tokyo, Sa Yu, Chiba and Kanagawa prefectures is to combat the latest surge in coronavirus infections.
The state of emergency will be extended to more regions. According to local media reports, Suka will add seven prefectures, including Osaka.
According to data from the public broadcaster NHK, Japan has recorded more than 298,000 confirmed Covid-19 infections and at least 4,192 people have died from the disease.
Limited impact on Japan
Nagai of the Oxford Economics Institute cited several factors to explain the limited economic impact, including commercial restrictions mainly for restaurants and bars in emergency areas.
Suga announced last week that it will shorten the business hours of dining establishments in these areas. For non-essential and non-emergency reasons, people are not encouraged to go outing after 8pm.
Through telecommuting, the number of people visiting the workplace will also be reduced by 70%. However, schools and kindergartens will not be closed this time.
Marcel Thieliant, a senior Japanese economist in capital economics, told CNBC: “The restrictions are very mild and mainly affect dining and entertainment activities, which account for about 3% of GDP.”
Thieliant said: “Given the state of emergency will only last for one month, the expansion to the Kansai region will not lead to a GDP growth of more than 0.1%,” according to reports, the latest emergency measures will be expanded to more regions.
He said: “We still believe that the state of emergency will expand across the country and become more severe, and shops and restaurants will be required to be completely closed.” He added that Capital Economics expects consumption in the first quarter to fall from the previous quarter. 1.5%. A quarter, if this happens.
Suka’s political future
Dealing with the Covid-19 situation in Japan may affect Suga’s chances of re-election. Suga’s predecessor, Shinzo Abe, took over as prime minister last year due to an unexpected health resignation.
Nagai of the Oxford Economics Institute warned that if the state of emergency is unsuccessful and needs to be extended for more than one month, Suga, whose support rating “has been significantly reduced in recent weeks,” will be “seriously hit.”
Nagai said: “In addition to a series of political scandals, (Suga)’s lack of leadership in dealing with Covid-19 has also been severely criticized.” After autumn, they may start looking for another leader to win the election.”