Japan’s prime minister, Shinzo Abe, put a number on the damage from the coronavirus on Monday: 108 trillion yen, or $989 billion. It is the largest stimulus package the country has ever assembled, and it is equal to about 20% of its economic output.
Abe said the package would be followed by a state of emergency, which he planned to declare as soon as Tuesday for Tokyo, its three neighboring prefectures, and Osaka, Hyogo and Fukuoka prefectures. CNN reported the emergency was expected to last about a month. A week earlier, the prime minister had still declined to take that step. Details of the package and an extra budget to pay for it were due Tuesday, when Abe was also expected to hold a press conference in Tokyo.
Who gets what
Cash handouts worth 6 trillion yen are set aside for households and small businesses that lost income. Companies can defer tax and social service payments worth 26 trillion yen. According to a government document obtained by Bloomberg, lower income households that lost pay because of the virus would receive 300,000 yen each, and households with children would get extra aid.
Firms that keep workers on the payroll are offered larger subsidies. Companies hit by the virus can put off income and regional tax payments for a year, and the property taxes of some smaller businesses could be cut as far as zero. The package also includes zero-interest loans. One more line item: enough Avigan anti-flu drugs for 2 million people this fiscal year.
The government plans the aid in two stages. The first aims to stop job losses and bankruptcies. A second round, after the virus is contained, would try to support what the document calls a V-shaped recovery, with steps to lift consumer spending and tourism and subsidies for regional economies.
“The details of the measures and the numbers involved are being debated until the last minute,” said ruling party policy chief Fumio Kishida earlier on Monday, before Abe spoke.
An economy under strain
Japan’s jobless rate held at 2.4% in February. Even so, the ratio of available jobs to applicants fell sharply to its lowest level in three years, and people who lost their jobs or face wage cuts have been taking up emergency loans quickly. Economists expect a deep recession, with export markets paralyzed and the summer Olympics postponed.
Tom Learmouth, Japan economist at Capital Economics, noted in a research note on Friday that recent unemployment, industrial production and retail sales data had shown some resilience in February. “There is no doubt that coronavirus disruption will deal a severe economic blow over coming months,” he wrote. Infections had accelerated in Tokyo and Osaka, he said, and fears of a second wave were keeping residents home and shops shut.
Staying home is a hard ask in Japan. Tokyo’s governor urged the city’s 13.5 million residents to telework where possible until April 12, yet many workers kept commuting. Government data from 2019 show about 80% of companies cannot let employees work remotely.
Japan had recorded more than 3,600 cases and 85 deaths, according to Johns Hopkins University. Its announcement followed a $2 trillion stimulus bill passed in the United States the month before, and spending plans from Germany, France, the United Kingdom, Italy and Spain.
Sources
- Japan launches $1 trillion coronavirus stimulus package as Prime Minister Abe announces state of emergency | Fortune
- The global economy just got a $1 trillion infusion from Japan | CNN Business
