A street near the previously crowded Kiyomizu temple, a popular attraction among tourists, is nearly deserted in this photo taken last July. Many stores closed permanently due to the coronavirus. Photo: REUTERS file

Recession risk looms with 3rd state of emergency

By Leika Kihara and Daniel Leussink

Japan's government is expected to issue a third state of emergency on Tokyo and three western prefectures that could last for about three weeks, according to media reports, underscoring its struggle to deal with a surge in new COVID-19 case numbers.

Some analysts say the decision, expected to be made as early as Friday, may push Japan back into recession if retailers are asked to close during the Golden Week holidays, which start next week and run through early May.

A renewed state of emergency would also cast doubt on whether Tokyo can host the Olympics in July, despite Prime Minister Yoshihide Suga's assurances it will proceed as planned.

"The risk of a double-dip recession has clearly heightened," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. "The impact of imposing curbs on Tokyo and Osaka alone would be quite big."

With thousands of new cases resulting from highly infectious strains of the virus, Suga said on Wednesday the government will decide this week whether to declare the state of emergency for major parts of the country.

If adopted in all four regions that made requests, the emergency measures would cover close to a quarter of Japan's population of 126 million and roughly 30% of gross domestic product (GDP).

The government is considering imposing state of emergency curbs from April 25 through May 11, Jiji news agency reported.

Other media have raised the possibility of stronger curbs than those issued last time in January, such as requests for department stores and other big retailers to close.

In a news conference on Thursday, Tokyo governor Yuriko Koike urged residents to cancel trips during Golden Week, and non-residents to refrain from coming into the city.


"The timing is not good," as it would hit service spending during the spring leisure season, said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

Tsunoda cut his forecast for second-quarter GDP to a 0.5% quarter-on-quarter rise, half the previously projected pace.

Japan's economy has emerged from last year's severe slump thanks to robust exports.

But analysts expect GDP to have shrunk in the first quarter due to the hit to consumption from the second emergency curbs that rolled out in January and say a second consecutive contraction in Q2 that would constitute a recession is possible.

While fresh state of emergency curbs likely won't trigger additional monetary easing, it could affect the Bank of Japan's quarterly growth projections due out next week, analysts say.

"Given prospects of strong global demand, the BOJ probably won't make big changes to its forecast of a moderate recovery," said Izuru Kato, chief economist at Totan Research.

"But a contraction in second-quarter GDP can't be ruled out, so the BOJ will probably issue plenty of warnings on the risks to domestic demand," he said.

Slow vaccine rollouts are already casting a cloud over the fate of the Olympics. Tokyo 2020 organizers said a policeman who worked with the torch relay in western Kagawa prefecture had tested positive for the virus.

© Thomson Reuters 2021.

©2021 GPlusMedia Inc.

Login to comment

Same old doom and gloom. The sun is shining outside btw.

-7 ( +10 / -17 )

Guess I got to close next week and try to enjoy spring anyways.

But can’t be going out or hanging out with others much even. :(

5 ( +8 / -3 )

Enjoy the sunshine folks!

Doom and gloom won't help much

-5 ( +8 / -13 )

Ouch. Your business closing again. What about the schools?

8 ( +9 / -1 )

Lockdown and more lockdowns-they don’t seem to be working do they?

-5 ( +7 / -12 )

Ouch. Your business closing again. What about the schools?

exactly! they need to close them to mitigate the spread.

5 ( +6 / -1 )

Was asking, @AlyRustom 8:45a, as to private and/or public school SOE situations because this @personiamnow 7:48am stated previously to be “a senior member of the city’s largest school” and would be most knowledgeable.

2 ( +3 / -1 )

Lockdown and more lockdowns-they don’t seem to be working do they?

Japan has never had a lockdown. What we get is a "state of emergency" in which life pretty much goes on as normal.

15 ( +16 / -1 )

Lockdown and more lockdowns-they don’t seem to be working do they?

no they wont as long as people are out in large numbers in parks malls shopping centers

9 ( +10 / -1 )

"The timing is not good,"

Oh? When did they have in mind?

5 ( +7 / -2 )

Japan's Suga government who are obsessed with bias that strong corona virus measure damages economy cannot even notice plural examples in Asia-Oceania that strict response to Covid-19 help also economy resultantly.

11 ( +11 / -0 )

If the 'leaders' ordered a serious lockdown during the first 'state of emergency' when people were worried and taking the coronavirus seriously, perhaps the pandemic could've been avoided. Such as New Zealand, South Korea, Vietnam, and (perhaps) China.

But namby-pamby 'urges' and 'requests' resulted in an ongoing dribble of disease that has resulted in yet another urge for citizens to stay home during their One Week of pleasure. All tourist-related businesses will suffer.

And people are not taking coronavirus seriously anymore given the government lackeys going to steak dinners and parties and 'vowing' to hold the Tokyo Olympics 'no matter what the cost.'

So, of course the economy will suffer. Again.

15 ( +15 / -0 )

Spoiler alert. Rich connected families can ignore this.

10 ( +11 / -1 )

It's the lackluster testing, no contact tracing, the 'look the other way' mentality that has got the country into this mess. Their own experts have been telling them to take it seriously but with those 'go-to' campaigns they snubbed them hugely.

9 ( +10 / -1 )

To think that the government was paying people to travel around a short four months ago. Can you believe that? Just think about that for a moment.

13 ( +13 / -0 )

Oh! The Japanese Government at its finest !

4 ( +4 / -0 )

How would we be able to tell?

4 ( +4 / -0 )


Lockdown and more lockdowns-they don’t seem to be working do they?

I don't know. Maybe Japan should try one and see.

BTW, did you get the vaccination in the UK then? As a resident of Japan, did you have to pay for it?

7 ( +7 / -0 )

It is again half measures that won’t work. Because Kanagawa, Saitama, Chiba and Shizuoka are not part of it.

And because it should last at least 6 weeks.

The Japanese economy by the way has not been on the “ slow recovery” they pretend to be on but on a constant slow decline since 2008 temporarily saved by the Chinese tourist boom.

And the policeman is not the first torch related Covid case, that was a Japanese actor taking part as torch bearer. Short memories here.

9 ( +9 / -0 )

Better healthy than dead. This recession had began 10 years ago. But property prices are still going up.

2 ( +5 / -3 )

Never mind, they can just print more money to keep the economy afloat.....

0 ( +1 / -1 )

harro Suga its time for 20man handouts for everybody?everything comes at costs even these so called "state of emergency" when people will be pushed stay at home without income...how abt do that now and asap?

3 ( +3 / -0 )

What recession, caused by a SOE? You can feel free to send me and all others some billions and then we pull out all worldwide economies at once just only by online orders , into a boom you’ve never seen before. In other words, it has nothing to do with the SOE.

2 ( +2 / -0 )

Japan has always been under a permanent recession (Ultra Great Depression) since the 1990s. Now, Japan got an extra whammy of recessions from the Covid-19 and Abe's 2019 tax hikes.

9 ( +10 / -1 )

If only there were a vaccine, or laws to be enforced to start containing this issue.........oh wait, there are. Japan just refuses to do them.

4 ( +5 / -1 )

It they are going to keep doing these half-way state of emergencies that end up doing more damage than good, why don't they just give a real shutdown a shot? I feel like they would have seen better results if they actually let people stay home instead of cutting off everyone's personal and free time but mandating work and crowded commutes which only make people's tension rise and they end up doing something silly.

4 ( +4 / -0 )

Was asking, @AlyRustom 8:45a, as to private and/or public school SOE situations because this @personiamnow 7:48am stated previously to be “a senior member of the city’s largest school” and would be most knowledgeable.

I see. I was just commenting based on what I hear from teachers and ALTs that I know that are involved in the school system. Most tell me that safety protocols are not in play all the time and that the students are maskless during PE and sit together during lunchtime, so all the signs are there.

1 ( +1 / -0 )

We personally not in recession. Still spending on good food, restaurants and travels. If there were more people like us, the economy could flourish.

Get out there and spend and save the economy.

-1 ( +1 / -2 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites