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IMF warns of coronavirus hit to Japan's economy via tourism, trade

20 Comments
By Leika Kihara

A prolonged and widespread coronavirus outbreak could hit Japan's economy, affecting tourism, retail and exports, among other areas, a senior International Monetary Fund official warned.

"The spread of coronavirus poses an emerging downside risk to Japan's economy, although the economic impact will depend on the extent of the spread of the disease and policy responses," Paul Cashin, the IMF's mission chief for Japan, told Reuters.

"If prolonged and widespread, this would likely affect Japan's tourism and retail activities through a decline in tourist arrivals and spending from China and elsewhere," he said in a written interview released on Tuesday.

The virus outbreak could also affect trade and investment as any further slowdown in China's economy could hurt Japanese companies' output and disrupt supply chains, Cashin added.

Cashin did not give estimates on how much the outbreak could affect Japan's growth, saying the impact will be taken into account when the IMF next updates its global forecasts in April.

The virus, which began in China and spread to 27 countries and regions, has heightened concern among Japanese policymakers that the world's third-largest economy - already hurt by soft global demand and private consumption - could slide into recession.

Japanese carmakers produce parts and retailers sell a wide array of goods in China, which is Japan's second largest export destination.

The outbreak is also a blow to Japanese department stores and hotels, as the Chinese make up 30% of all tourists visiting Japan and nearly 40% of the total sum foreign tourists spent last year, according to an industry survey.

© Thomson Reuters 2020.

©2020 GPlusMedia Inc.

20 Comments
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100% Japan’s fault, be it the fact that they let the first group back from Wuhan just waltz into downtown Tokyo, or the decades-long practice of outsourcing to other nations for cheaper labor and parts. No pity here.

-4 ( +9 / -13 )

Japan has made the elementary mistake of putting all its eggs in one basket....

6 ( +9 / -3 )

I agreed that Japan made elementary mistake, but not too bad, because no one seems spreading virus all over Japan and hospitals are not in panic, though the ship is really in big panic. I worry rather influenza.

-1 ( +3 / -4 )

International Monetary Fund official warned.

"The spread of coronavirus poses an emerging downside risk to Japan's economy, although the economic impact will depend on the extent of the spread of the disease and policy responses," Paul Cashin, the IMF's mission chief for Japan.

Hold on Mr. Cashin, this is not China, as Japan has no spread out epidemic so quit the false fake media news. Give us proof to warrant your statement. Outside of risk is the use of valuable resources for Japan. While the Chinese make up 30% of all tourists visiting Japan and nearly 40% of the total sum foreign tourists spent last year, the downside that is not being reported is of that 30% there is the 5% who overstay illegally so that only means 25% visiting Japan of that, means 40% spent it costs Japan valuable resources that ends up leaving Japan with their overbuying and not leaving resource assets for Japanese and other tourists to procure. Yes it costs 3 to 5 times as much to replenish stock at the cost of Japanese citizens via increased taxation and higher prices to exporting goods in order to make what was sold. Simply not worth it. Not to mention the other headaches they bring to local businesses. Only a very small 1% actually see any profit, that means 99% see higher costs.

2 ( +7 / -5 )

Japan, as always, WILL survive...with or without china's tourists or trade.

-2 ( +5 / -7 )

Japan has relied on the Chinese tourist for growth, as many Asian countries have.

Until the tourism businesses realised the Chinese spending power it was persona non grata.

When the numbers picked up the greed took over.

Over a year ago the Japanese were complaining that tour buses could not be hired as the Chinese were overbooking them.

I have seen 200+ room capacity hotels in Asia dealing exclusively with the Chinese-those hotels are not advertised on any major sites.

They look like ghost hotels now.

The declining numbers are going to do real damage to the bottom line

5 ( +5 / -0 )

The biggest damage is going to be China. There will be damage to all other nations as well but nowhere near the scale of China for obvious reasons.

-1 ( +2 / -3 )

Corona Virius could happen any where in the world, people around the world better spend more time in preparing the cure and stop concentrating on bad naming countries and blaming China. Time is running out for anyone. By the way , way a new virius had started in an African country. with 16 people dead.

2 ( +3 / -1 )

Corona Virius could happen any where in the world, people around the world better spend more time in preparing the cure and stop concentrating on bad naming countries and blaming China. 

No I don't believe it could. Needs the right breeding conditions like the Chinese live wild meat markets and species like bats to jump the link to humans.

1 ( +3 / -2 )

Even a story on the news tonight showing the deer in Nara missing out on their "shika senbei" crackers that (now absent) tourists from overseas would feed them in big quantities.

2 ( +2 / -0 )

Japan, as always, WILL survive...with or without china's tourists or trade.

Ever heard about 'globalization'. China has grown so big that it is now a vital part of the global economy. This virus has seriously impacted the reopening of the factories in China and if things do not improve then I fear there will be dire consequences. How about those Japanese companies who have investment in China? Honda has a joint venture manufacturing plant in Wuhan (talking about bad luck) and news has it that it is trying to reopen on the 14th. Of course, Japan will survive but the economy will take a big hit. This is the truth. Whether you like China or not.

1 ( +3 / -2 )

"Japan has relied on the Chinese tourist for growth, as many Asian countries have.

Until the tourism businesses realised the Chinese spending power it was persona non grata."

"Mr Kurisupiso" speaking as if Japan will disintegrate without Chinese (or any one else's ) tourists.

Mr. Kurisupisu, tourism is 7.4% of Japan's economy!!!!!!

Please, repeat after me: 7.4%, 7.4%, 7.4% ad infinitum.

-3 ( +2 / -5 )

@ PT

What economy are we talking about?

Oh, the trillions of yen tourist economy?

Whi knows what the percentage is but it is large.

But never mind just that!

No, the viral outbreak will have an effect on SMEs and blue chips all connected to many different areas of the Japanese economy.

The domestic Japanese is diminishing day after day and where is growth coming from?

Not the domestic market-that is for sure!

I don’t my critiques of my posts but inane narrowed inability to process on a macro level is inexcusable....

1 ( +2 / -1 )

Like they really need the Intentional Malfeasance Fund to tell them that.

-1 ( +0 / -1 )

"What economy are we talking about?"

Economy, as in GDP.

I'm pretty sure you know what it means.

If not, find out.

Tourism represents 7.4% of Japan's GDP

You don't have to agree; that's a FACT.

-3 ( +0 / -3 )

"apan has relied on the Chinese tourist for growth"

Your opening statement.

Please, spare me the "macro level" bull....you wanna allude to now.

-3 ( +0 / -3 )

Tourism represents 7.4% of Japan's GDP

Considering the anemic, less than 2% growth of Japan's GDP over the past roughly 10 years (and roughly 1% over the past 5 years), that's a huge change. Let's say that tourism get's cut by only 20%. That's a 1.48% cut in GDP.

In other words, the cut in tourism would put Japan in recession. The jobs? Evaporating like a puddle in a summer's day. The money? Gone, possibly never to return if and when the Chinese recover, they decide to do their tourism somewhere else.

3 ( +3 / -0 )

" Let's say that tourism get's cut by only 20%. That's a 1.48% cut in GDP.@

OK; let's just be silly for one second.

Assuming that all 100% of the tourists are Chinese (you, as well as everyone else knows they're not), any 100% fall in tourism (highly unlikely) will cut a mere 7.4% out of a 4.8 trillion economy.

Whatever accounts you come up with, Japan will carry on regardless.

Japan's economy is just too strong (irrespective of what JT "experts" say, out of jealousy) to fold on account of tourism droplets. FYI, Japan earns more on its foreign investments than from its trade balance (check if you don't believe it).

Over 20 years of "recession" they only recently dropped to 3rd; this in spite of China's massive population, land and resources. And who's investing in China big time?

Who is the Word's biggest creditor Nation, 20 year on the trot?

Who's got the world's biggest reserves? Hint: Japan Post.

-4 ( +0 / -4 )

It already has. We canceled our trip to Japan.

0 ( +0 / -0 )

No mention of the Tokyo Olympics, which begin in just over 5 months.

Potential losses related to the cancellation or lack of visitors

to the Olympics is a major consideration in itself...

but apparently not taken into account by the IMF.

3 ( +3 / -0 )

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