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The risk of recession erupted when Japan faced a third emergency to prevent pandemic

© Reuters. Passers-by wearing face masks walked past a waiting room amid an outbreak of coronavirus (COVID-19) in Tokyo,

By Leika Kihara and Daniel Leussink

TOKYO (Reuters) – The Japanese government is expected to issue a third emergency for Tokyo and three western provinces that could last for about two weeks, according to media reports. Their struggle to cope with the increase in the number of new COVID-19 cases. .

Some analysts say the decision, expected to be made as early as Friday, could push Japan back into recession if retailers are ordered to close during the Golden Week holiday, starts next week and runs until early May.

The renewed emergency will also raise doubts as to whether Tokyo can host the Olympics in July, though Prime Minister Yoshihide Suga assures it will go according to plan.

Hiroshi Shiraishi, Senior Economist at BNP Paribas (OTC 🙂 Securities, said: “The risk of a double recession is clearly high. “The impact of the curb imposition on Tokyo and Osaka alone will be quite large.”

With thousands of new cases due to highly infectious strains of the virus, Suga said on Wednesday the government will decide this week whether to declare emergencies for major regions of the country.

If applied in all four regions where the request is made, the emergency measures would include nearly a quarter of Japan’s population of 126 million people and about 30% of gross domestic product (GDP).

Jiji news agency reported that the government is considering imposing an emergency restriction from April 25 to May 11.

Other media reported the possibility of more restrictive measures than last enacted in January, such as requiring department stores and other major retailers to close. .

The Kyodo news agency quoted Economy Minister Yasutoshi Nishimura as saying: “We need to take stronger and more targeted steps than before, including a request (for stores) to close.


“The timing is not good,” said Takumi Tsunoda, senior economist at the Shinkin Central Bank Research Institute, as it will affect service spending during the spring season of entertainment.

Tsunoda cut its second-quarter GDP forecast to an increase of 0.5% q-o-q, about half the rate previously expected.

The Japanese economy rose from last year’s severe slump thanks to strong exports.

But analysts predict GDP will drop in the first quarter due to consumption effects from the second emergency restriction orders in place in January and suggest that the second consecutive decline in the second quarter could constitutes a probable recession.

While the new emergency constraint is likely not to trigger further monetary easing, it could affect the Bank of Japan quarterly growth forecast to be put on, analysts said. out next week, the analysts said.

“With a strong global demand outlook, the BOJ probably won’t make a major change to its moderate recovery forecast,” said Izuru Kato, chief economist at Totan Research.

“But it is impossible to rule out the decline in second quarter GDP, so the BOJ is likely to issue more warnings about the risks to domestic demand,” he said.

The slow vaccine rollout is creating a cloud for the fate of the Olympics. Tokyo 2020 organizers say a policeman working with the torch relay team in western Kagawa Prefecture tested positive for the virus.

Adding to the signs of the pandemic’s growing impact, an auto industry lobbyist said the Tokyo Auto Show would be canceled this year.

Tokyo reported 861 new cases on Thursday, the most since January 29 during the third wave of pandemic and a previous state of emergency. Osaka Prefecture reports 1,242 cases daily, near a record high last week.



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