Japan to lose trillions of yen in consumption under virus emergency

Japan to lose trillions of yen in consumption under virus emergency

A monthlong state of emergency planned by the Japanese government to contain a resurgence of novel coronavirus infections is expected to knock trillions of yen off private consumption, with some economists predicting the economy will return to contraction.

The expected economic impact of a state of emergency in Tokyo and three neighboring prefectures, which the government of Prime Minister Yoshihide Suga is considering declaring on Thursday, will likely be smaller than those seen after the first emergency declaration in April last year in Tokyo and six prefectures.

The declaration then was later expanded to the entire nation and fully lifted in late May. Expected restrictions this time, though not legally binding and limited in geographical reach, could still wipe out a significant part, if not all, of the growth previously expected in the January to March quarter, economists said.

An economic slowdown in the capital could have a ripple effect, and there is even a possibility that the planned state of emergency will be expanded, they said.

Tokyo reported more than 1,200 new coronavirus infections Tuesday, with a record-high 111 COVID-19 patients in serious condition. It was the second-highest figure for the capital, after 1,337 cases reported on Dec. 31.