Concerns are growing in Japan that the government’s imminent declaration of a fresh state of emergency over the coronavirus pandemic in Tokyo and three nearby prefectures will deal a decisive blow to businesses that have already been hit hard by the novel virus crisis.
According to Tokyo Shoko Research Ltd., around 100 companies, chiefly small businesses such as operators of restaurants and hotels, have gone bust each month since September, while the cumulative number of coronavirus-linked bankruptcies came to 892 as of Tuesday.
Many other midsize and small firms are managing to remain viable. However, the second emergency declaration in the metropolitan area, which the administration of Prime Minister Yoshihide Suga aims to make Thursday, may prompt those struggling firms to give up their efforts for survival.
An official at the private credit research agency warns of possible chain bankruptcies as well.
“Companies will hit the rocks even after getting finance unless they have sales,” the official said, noting that cash-strapped business partners will likely step up moves to collect receivables from them.
“In such cases, the number of business closures by companies in the black will increase,” the official forecast.
Junichi Makino, chief economist at SMBC Nikko Securities Inc., estimated that the country’s annual real gross domestic product will fall by up to ¥3.8 trillion if the state of emergency lasts one month.
Although the estimated loss is one-fifth of that caused by the first state of coronavirus emergency imposed in April last year, the impact of the upcoming restriction measures will vary from industry to industry, he pointed out.
“(The government) needs to offer strong financial support for, among others, restaurants’ investments aimed at preventing infection, such as those in renewing ventilation systems,” Makino said.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.