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Emergency lifting to boost spending only slightly: economists

  • May 15, 2020
  • , Jiji Press , 10:32 p.m.
  • English Press

Tokyo, May 15 (Jiji Press)–Personal consumption is expected to recover only slightly in Japan after the country lifted the coronavirus state of emergency in 39 of its 47 prefectures Thursday, economists have said.

Resumption of economic activities following the lifting will push up household consumption by up to 1.7 trillion yen, according to Toshihiro Nagahama of the Dai-ichi Life Research Institute.

But the recovery will be “limited” due to concerns over a resurgence of coronavirus infections, he said. “I wouldn’t be surprised if it takes three years for consumption to return to normal.”

His estimate is based on a scenario that consumption for nonessential and nonurgent purposes, such as dining at restaurants, home repairs and entertainment, returns by the end of this month to two-thirds of

the levels before the outbreak in 34 of the 39 prefectures and to 50 pct in the other five, which had been placed under special alert status.

Still, household consumption across the country is projected to fall by 14.3 trillion yen, according to Nagahama.

Yasuhide Yajima of the NLI Research Institute said consumption “will grow by 6 trillion yen in a month if spending in the 39 prefectures return to the past levels.”

“But full recovery is unlikely as long as voluntary restrictions continue in Tokyo and elsewhere,” he continued.

In order to promote consumption and investment amid a prolonged battle against COVID-19, it would be necessary to draw up economy-supporting measures in preparation for a possible virus resurgence and exit strategies for individual regions, he said.

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