Restaurants closed in Tokyo’s Shibuya district, January 8. Bars and snack bars are among the companies most affected by the guidelines.
Photographer: Kentaro Takahashi / Bloomberg
Photographer: Kentaro Takahashi / Bloomberg
Japanese Prime Minister Yoshihide Suga appears determined this week to extend the state of emergency to major metropolitan areas that will inflict further problems on the economy, as he tries to contain the record cases of Covid-19 and reverse the decline in public support. .
In addition, parliament is expected to vote as early as Monday on measures to add teeth to emergency orders, including fines for bars and restaurants that defy current voluntary guidelines to close by 8 pm.
The emergency covering 11 areas, including Tokyo, Osaka and Nagoya, helped to stop a rapid acceleration of the virus cases, which reached records in early January and increased concern to destroy the older population in the developed world. Although infection numbers have dropped since then, the Suga government said they are still worryingly high.
Suga is planning to extend the emergency by about a month beyond the February 7 deadline and the possible removal of Tochigi prefecture from the list as the situation improves there, according to local media. reports. The announcement could be made on Monday, said broadcaster FNN.
Japan’s current measures, which also include looking for people to work from home, are much less strict and enforceable than the blockade of some European countries. But they have already caused a radical change, in the view of economists. Instead of the year starting with a slow recovery, some of them now see a double-digit contraction approaching.
Japan outbreaks make Suga look more like a short-term Premier
The prime minister, who is in danger of being replaced by the ruling party before an election to be held in October, has seen his support wane since he took office about four months ago. Critics say his focus on stimulating the economy has slowed efforts to contain infections. Now he is faced with the increasing difficulty of companies to control the virus, strengthening his leadership and keeping alive the hope to hold the Olympic Games in the summer.
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Covid cases in Tokyo began to decline during the emergency
Source: Tokyo Metropolitan Government
“The damage to companies would be huge,” said the owner of a sushi restaurant, Mamoru Sugiyama, referring to an extension. Bars and snack bars are among the companies hardest hit by the guidelines. He temporarily closed his restaurant, which has a 130-year history in Tokyo’s Ginza shopping district.
“Some companies are about to run out of loans and I think that if the emergency continues until February, companies may start to break down one after another, even in Ginza,” said Sugiyama, who also leads a coalition of some 370 restaurants and local bars.
Still, a Nikkei / TV Tokyo survey suggests public support for a longer emergency. The January 29-31 survey showed that 90% of respondents favor an extension.
The government said the emergency could end when the virus crisis moves to Stage 3 on a four-stage scale that is based on six data points.
In Tokyo, that would mean that daily infections dropped to less than 500. Tokyo reported 633 new infections on Sunday, well below the recent peak of 2,447 on January 7. On January 27, the occupancy rate for hospital beds in the capital was 73% and intensive care units had 113% capacity, according to the Ministry of Health. Both numbers would have to fall below 50% to reach Stage 3.
“We can see that the state of emergency has had an impact, but it is very weak,” said Yoshihito Niki, professor of clinical infectious diseases at the Showa University School of Medicine in Tokyo, indicating the need to extend the measures. “The government will need to exercise patience at least until February.”
The Sanjo Street shopping gallery in Kyoto, 14 January. The government said the emergency could end when the virus crisis moves to Stage 3 on a four-stage scale that is based on six data points.
Photographer: Kosuke Okahara / Bloomberg
Japan’s parliament is expected to pass two bills this week imposing penalties on those who fail to comply with official virus guidelines. This would include fines of up until 300,000 yen ($ 2,866) in bars and restaurants that do not comply with closing orders earlier, according to the opponent’s Japanese Constitutional Democratic Party website. A separate act on infectious disease control would allow fines of up to 500,000 yen for those with Covid-19 who refused to be hospitalized or left before being formally discharged.
Since the emergency declaration in early January, economists have warned that the less stringent guidelines compared to the first emergency in April were at risk of being insufficient and causing more damage over time. This time, schools remained open and the streets continued to have pedestrian traffic, albeit less than during normal hours, despite repeated calls from authorities to stay home.
Toshihiro Nagahama, an economist at the Dai-Ichi Life Research Institute, sees an emergency spanning two months, cutting about 3 trillion yen from the economy.
Although the consensus among analysts is that the economy will shrink 2.5% annualized this quarter, economists Yoshimasa Maruyama and Koya Miyamae of SMBC Nikko Securities Inc. now see a stronger end by 2020, leading to a contraction of 11.5 % in the three months to March.
Still, an unemployment rate of just 2.9% and annual declines in the number of bankruptcies show that spending and support for government and Bank of Japan loans has helped to cushion the economic blow of the pandemic so far. Suga’s administration obtained an extra third budget in parliament last week, offering another round of aid to businesses, medical facilities and the economy.
The concern in the future is how much longer companies can take if the emergency is extended and consumer spending remains subdued.
Yasuhide Yajima, chief economist at the NLI Research Institute, warns that there will be no dramatic revival of growth, even when the emergency is over, unless there are more concrete guarantees for the public.
“Regardless of the state of emergency, consumption will not return until we see the impact of vaccination,” said Yajima.
– With the help of Emi Nobuhiro, Gearoid Reidy, Isabel Reynolds and Toru Fujioka
(It updates details on the proposed fines, a survey on emergency extension and GDP forecasts.)