As renewed lockdowns and climbing coronavirus infections greet the new year around the world, how Japan emerges from the current emergency will be a lesson — or omen — for other big economies, writes Bloomberg’s Daniel Moss. The view from “economy watchers” — workers with jobs sensitive to economic trends in Japan — doesn’t bode well. Sentiment posted the largest drop in nine months in December, data showed Tuesday.

Counterintuitively, corporate bankruptcies fell to a 31-year low last year in Japan — but only because government support kept big companies afloat. Small firms weren’t so lucky: Bankruptcies with debts of below ¥10 million rose 23% in 2020, as the pandemic hit the restaurant and tourism sectors hard. The hotel industry alone saw a 57% jump in bankruptcies from a year earlier, with 118 hotel operators going under.

Japan expands state of emergency | NIPPON TV NEWS 24 JAPAN
Japan expands state of emergency | NIPPON TV NEWS 24 JAPAN

Concerns are growing that the expanding new state of emergency will deal a decisive blow to firms that are already on the edge. Restaurants and bars are asked to close by 8 p.m. and stop serving alcohol an hour earlier. Even with the promise of aid if firms follow the request, prospects for many of Japan’s traditional izakaya pubs look dim.

“Customers usually start flocking in around 7,” one Tokyo izakaya owner tells Reuters. “If we can only serve alcohol until 7, there’s no point in staying open in the evening.”

In areas under the emergency, supermarkets are considering restricting entry of customers to prevent overcrowding, and stopping discount sales and limited-time offers. And JR East said Wednesday that the last trains of the day will depart earlier on 11 lines in the Tokyo area starting Jan. 20.