Japan’s economy takes delicate steps to reopening while balancing health risks

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Japan’s economy is reopening cautiously with social-distancing restrictions amid the coronavirus pandemic.

The delicate “new normal” balancing act playing out around the world is precarious but imperative for Japan, whose long stagnant economy sorely needs tourism, exports and thriving small businesses to avoid sliding deeper into recession.

Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, said although Japan’s coronavirus restrictions were never as strict as the lockdowns in the US, Europe and some other parts of Asia, the damage was still considerable.

Japan’s economy was already hurting from a tax increase last year.

Then auto exports to the US and Europe plunged when the coronavirus hit. Consumer spending is unlikely to recover quickly.

“Americans may feel happy and go splurging after the lockdown is lifted. But the Japanese mind set tends to become even more cautious about spending because of uncertainties about the future,” Mr Maruyama said.

Japan’s economy is already in recession

A return to pre-pandemic levels of economic activity is not expected for Japan until 2023, a year after a likely recovery in the US, he said.

Although shuttered businesses are opening again, fewer seats are allowed at theatres, events and hostess and host bars.

Masked clerks peer from behind plastic curtains at stores where temperatures are checked and hands disinfected at the entrance.

Professional baseball is playing to empty stands.

Masks, worn by many Japanese already anyway due to a near national allergy to cedar pollen, are the dress code everywhere.

Japan’s exports and imports have plunged. The world’s third largest economy has contracted for two straight quarters and is already officially in recession.

The Tokyo Olympics, the big symbol of hope for the economy, has been postponed until next year, costing billions of dollars to the capital, although the exact amount has not been disclosed.

The government has announced 230 trillion yen (£1.7 trillion) in stimulus to coax consumers into spending.

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