Will a Third State of Emergency Drive Japan Into Recession?
Japan, the world’s third-largest economy, is facing another surge in the number of COVID-19 cases. Tokyo has reached 843 cases, the utmost number of infected people since the pandemic started. Osaka prefecture received a report of 1,242 daily cases. It is anticipated that Japan’s government is announcing the third state of emergency as early as Friday on the three western prefectures and Tokyo. This precautionary measure can last for two weeks, commencing from April 25 through May 11 to deal with the surge in the number of cases.
If the state of emergency gets announced and implemented in the four regions, this would cover Japan’s quartile population or roughly 126 million and approximately 30% of GDP (gross domestic product). As analysts state this won’t presumably start an added monetary easing, though this could still impact the Bank of Japan’s quarterly growth forecasts.
Analysts also expect the first quarter’s GDP to decline as a result of such measures. However, a second back-to-back contraction in the second quarter would potentially represent a technical recession as Japan is suffering the fourth wave of the pandemic.
This state of emergency might push Japan’s economy back into recession if the large retailers and department stores are ordered to close their business throughout the state of emergency during the upcoming Golden Week holiday. Japan’s Golden Week is a series of four different holidays within seven days. This starts next week up until early May. The Golden Week is said to be one of the three most eventful holiday seasons, apart from New Year and the Obon week.
In a news conference on Thursday, Tokyo governor Koike encouraged residents to call off trips during Golden Week and advised non-residents to steer clear of traveling into the city to avoid the virus transmission.
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