PM Suga’s bet that a less-stringent state of emergency will limit the economic damage of virus containment runs the risk of instead compounding the pain if it proves insufficient, according to Bloomberg.
Success would mean solving the country’s health crisis without sacrificing too much economic activity, perhaps boosting Suga’s long-term leadership credentials. Failure, though, would mean more deaths in a prolonged emergency that goes nationwide, a much bigger hit to the economy and Suga’s stint as prime minister coming to an end later this year.
But the declaration of another state of emergency appears to have come too late, reports Kyodo, with the government’s decision-making slowed by its prioritization of economic recovery and the need to placate factions in the ruling party that clinched Suga’s election as PM.
The monthlong state of emergency is expected to knock trillions of yen off private consumption, with some analysts predicting the economy will return to contraction. One estimates that about ¥4.89 trillion of domestic consumption will be wiped out, pushing down annual GDP by close to 1%.
Restaurants will be among the hardest hit. Owners, who will be asked to shorten their business hours, are bracing for more pain after bankruptcies in the sector hit an all-time high last year. The Japan Chamber of Commerce and Industry asked Thursday for “flexible and swift” aid from the government so that businesses that follow the requests can survive.
The government is set to pay monthly benefits of up to ¥1.8 million each to restaurants and bars that shorten their hours, while sources say suppliers to such businesses may also soon be eligible for aid of up to ¥400,000.