Asia

Japan PM Shinzo Abe to consult experts about extending state of emergency

adminApril 30, 20202 Mins read87 Views

TOKYO: Japanese Prime Minister Shinzo Abe said on Thursday (Apr 30) that the government would consult experts to decide whether to extend the state of emergency beyond May 6.

Abe, speaking in parliament, also said the situation surrounding the coronavirus epidemic continued to be "severe".

The Nikkei business daily reported on Wednesday that the government was planning to extend the nationwide state of emergency by about one month.

Japan's parliament is set to approve a US$241 billion supplementary budget on Thursday to fund a stimulus package featuring cash payouts and loans to cash-strapped firms to cushion the economic blow from the pandemic.

The package features cash payouts of 100,000 yen (US$938) per citizen, a move Abe said would offer broad aid to households which saw income fall sharply due to job losses or declines in work hours.

READ: Japan's Abe says impossible to hold Olympics unless COVID-19 pandemic contained

In addition to the cash payouts to households and small firms, the stimulus package includes the cost of beefing up medical systems to cope with the new virus and 1 trillion yen in extra subsidies for local governments.

But the deepening pain from the pandemic, which has forced residents to stay home and businesses to shut down, is already drawing calls from politicians for even bigger spending.

A woman waves to a relative aboard a train on a platform of Tokyo station where fewer people than usual are seen during Golden Week holidays following the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan, April 29, 2020.REUTERS/Kim Kyung-Hoon

Despite costing the government more than 12 trillion yen, blanket cash payouts would only push up Japan's economic growth by up to 0.6 percentage points, said chief economist at Dai-ichi Life Research Institute Hideo Kumano.

"The impacts on stimulating consumption will be small because many consumers will still refrain from going out for spending," he said.

Japan's March factory output fell at the fastest pace in five months, while retail sales also dropped as businesses struggled with the coronavirus pandemic's sharp hit to overseas and domestic demand.

The global economy could this year see the steepest downturn since the Great Depression of the 1930s due to a virus-driven collapse of activity, with Japan's economy facing stagnation due to its export dependence and soft domestic consumption.

Official data on Thursday showed factory output slipped 3.7 per cent in March from the previous month, a smaller decline than the 5.2 per cent drop in a Reuters forecast.

The reading marked the sharpest fall in production since October last year, and followed a downwardly revised 0.3 per cent drop in the previous month.

A woman wearing a protective face mask walks in an empty underpass during Golden Week, a week-long holiday in Japan, under a nationwide state of emergency, near Tokyo Station in Tokyo, Japan April 27, 2020, as the spread of the coronavirus disease (COVID-19) continues. REUTERS/Issei Kato

Automakers and machinery manufacturers suffered output declines due to slower demand for parts and equipment from factories overseas, especially in China.

Manufacturers surveyed by the government expect output to rise 1.4 per cent in April and drop 1.4 per cent in May, the data showed.