Japans state of emergency is seen having limited impact on the economy – CNBC

General

The state of emergency at the time ended in late May.This most current state of emergency in Tokyo, Saitama, Chiba and Kanagawa till Feb. 7 was announced by Japanese Prime Minister Yoshihide Suga last week, in a quote to combat the most current surge in coronavirus infections.The state of emergency is set to be expanded to more locations, with regional media reports that Suga will add 7 more prefectures, consisting of Osaka.Japan has tape-recorded more than 298,000 confirmed Covid-19 infections while at least 4,192 lives have been taken by the illness, according to information from public broadcaster NHK.Limited effect on JapanOxford Economics Nagai cited numerous factors to explain the minimal financial effect, including company restrictions that are mainly targeted only at dining establishments and bars in the locations under the state of emergency.Operating hours of dining and drinking facilities in those areas will be reduced, according to the statement by Suga last week.” Given that the state of emergency will just last for one month, the expansion to the Kansai region will not result in a drag of more than 0.1% of GDP,” Thieliant said, referring to the latest emergency situation procedures that will supposedly be broadened to more locations.” We still think that the state of emergency will be extended across the country and made more oppressive, with dining establishments and shops asked to close altogether,” he said, including that Capital Economics expects a 1.5% quarter-on-quarter drop in usage in the first quarter if that happens.Sugas political futureThe handling of the Covid-19 scenario in Japan could affect the reelection chances of Suga, who took over as prime minister last year following the unforeseen resignation of his predecessor Shinzo Abe over health concerns.Oxford Economics Nagai cautioned that Suga– whose approval score has “already declined sharply in current weeks”– will be dealt a “major blow” if the state of emergency is unsuccessful and needs to be extend beyond one month.

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