With the coronavirus decimating economies across the world, Japan is trying its best to boost its economy. “The pneumonia-causing virus has already rocked the financial markets, frozen tourism, cooled down consumption and disrupted companies’ production, but how much longer the economic blow will last is anybody’s guess,” according to The Japan Times.
Notably, experts for the region are suggesting that the country will need to infuse lots of cash in the coming days to see positive change. “Some lawmakers have said that Japan will need tens of trillions of yen worth of stimulus combined with extraordinary policies such as handing out cash and lowering the sales tax rate, which was raised just about six months ago after being delayed twice, to ease people’s concerns and sustain consumption,” according to the publication.
Interestingly, economists are recommending that the Japanese government help companies in order to aid employees first and foremost. “Economists say that buoying consumption is indeed important, but that the first priority at this point should be to support companies unexpectedly hit by the virus and those who have lost or will likely to lose their jobs,” according to The Japan Times. While the U.S. is slated to give cash payments to all taxpayers in the coming days, Japanese economists recommend otherwise. “They also say that cash distribution won’t be so fruitful when people’s mobility is restricted, while slashing the consumption tax rate is unrealistic in terms of current political hurdles as well as technical procedures,” according to the newspaper.
“[If the coronavirus shock] continues for a longer period of time, more companies will struggle with their cash management. This could deteriorate employment and result in stalling consumption,” said Yoko Takeda, chief economist at Mitsubishi Research Institute.
Unfortunately, the extent of the effects from the coronavirus is still unpredictable, although a recession is highly likely for the region.
Kiichi Murashima, Japan chief economist at Citigroup Global Markets Japan, said “three major COVID-19 factors are battering the economy: dwindling numbers of inbound tourists, weak exports and subdued consumption. The consumption factor, which had been already damaged after the October sales tax hike, has weighed on the economy significantly since Prime Minister Shinzo Abe requested people refrain from attending events.”