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The number of cases in Japan increased dramatically this winter. However, following the issuance of the emergency declaration, the number of cases in the capital Tokyo has recently started to decline. However, the Japanese government did not dare to worry about it. Economists expect the Japanese economy to be seriously affected this year and it is estimated that it will not be possible to return to pre-pandemic levels until 2023.
Japan’s declaration of a state of emergency, which includes requiring people to work from home and suggesting the timing of restaurant closures, etc., although not strictly enforced as in European countries, is enough to have an impact on the economy. Economists at the Daiichi Life Research Institute estimated that the emergency lasted two months and caused an economic loss of around 3 trillion yen.
The Japanese parliament is also on the verge of passing a policy to increase the system of sanctions for emergency orders, including fines for bars and restaurants that do not comply with business orders, and the legislation is expected to finally pass in the upper house. As for when the emergency will end, the Japanese government currently stipulates that control will not be relaxed until the epidemic has subsided to stage 3. For Tokyo, the daily infection rate should drop below 500 and remain at that level.
The number of people infected in Tokyo this week has fallen below that level and well below the peak of 2,447 on January 7. But there are two other pieces of data, including hospital bed occupancy rate and intensive care unit bed capacity should be less than 50%, now 73% and 113%, so it is not up to standard. .
Although the unemployment rate and the corporate bankruptcy rate have not risen with financial support from the government, people are now concerned about how long businesses can endure if the emergency continues and consumer spending remains sluggish. Economists now believe that even if the emergency has passed, the economy will not recover sharply unless public confidence is restored.
The key to regaining confidence lies in the impact of the vaccine. Japan has confirmed that it will locally produce vaccines produced by the British pharmaceutical giant AstraZeneca. The production ratio reaches 75%, which is equivalent to 90 million doses of the 120 million doses of vaccines that will be produced in Japan. Headquartered in western Hyogo prefecture. Japanese biopharmaceutical company JCR Pharmaceuticals is expected to become a partner of AstraZeneca. The US pharmaceutical Pfizer also applied for approval of the vaccine in Japan. Japan hopes to vaccinate everyone before the Summer Olympics.
Bank of Japan Governor Haruhiko Kuroda is optimistic that the Japanese economy is likely to return to its pre-coronavirus pandemic level in March next year. Digitization and a green economy will drive growth. He said: “The green economy was important before the pandemic, but it is more important now. This will make our economy more sustainable. At the same time, it will provide a growth boost.”
However, the forecast of the average economists from ESP Forecast of the Japan Institute of Economic Research is not so optimistic. They expect real GDP to continue growing through January to March 2022, but it is unlikely to be pre-pandemic again before 2023.
According to Bloomberg analysis, Japan’s decision to extend the state of emergency will prolong the suffering of companies, but if the virus is to be controlled, the vitality of the Tokyo Olympics is maintained and leadership is consolidated, it seems that the Japanese Prime Minister I have no choice.
(First Image Source: Flickr / Urawa Zero CC BY 2.0)
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