Japan to declare third state of emergency in Tokyo as Covid cases rise ahead of Olympics
Analysts warn of double dip recession if retailers are asked to close
Tokyo — The Japanese government plans to declare a state of emergency for the third time for Tokyo following a resurgence of new Covid-19 infections just three months before the start of the Olympic Games.
Prime Minister Yoshihide Suga said on Thursday the government will formally declare the state of emergency after a meeting with experts to be held on Friday, when asked when the decision will be made.
While Suga did not specify the length of the state of emergency, public broadcaster NHK said the government is considering imposing the curbs from April 25 to May 11.
Suga also did not give any details on what steps the new state of emergency could entail. But media reports say they could include stronger steps than those issued in January, such as requests for bars and department stores to close and for events to be conducted without spectators.
Some analysts said another state of emergency could 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.
"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."
Japan, which has only just emerged from a severe economic slump last year, is struggling to contain both a resurgent outbreak and the economic fall-out.
Organizers of the Tokyo Motor Show, a marquee event of the country's most important industry, said on Thursday the auto show will not take place this year.
That cancellation is also likely to raise more questions about the government's insistence that the Tokyo Olympics, delayed from 2020, will go ahead this summer.
Japan has so far avoided an explosive spread of the pandemic that has plagued many Western countries. There have been a total of about 540,000 cases and a death toll of 9,707.
But the latest rise in infections has stoked alarm, coming just three months before the planned start of Olympics and amid a sluggish vaccination roll-out.
Tokyo 2020 organisers said a policeman who worked with the Olympic torch relay in western Kagawa prefecture had tested positive for the virus.
With thousands of new cases resulting from highly infectious strains of the virus, Tokyo and three western prefectures have sought emergency measures.
"We need to take stronger and more targeted steps than before, including requests (for shops) to close," economy minister Yasutoshi Nishimura was quoted as saying by Kyodo news agency on Thursday.
Tokyo reported 861 new cases on Thursday, the most since January 29, which was during the third wave of the pandemic and a previous state of emergency. Osaka prefecture reported 1,167, down slightly from a record.
"The timing is not good," as it would hit service spending during the spring leisure season, Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute, said of the latest planned curbs.
Tsunoda cut his forecast for second-quarter GDP to a 0.5% quarter-on-quarter rise, half the previously projected pace.
Daiwa Institute of Research said a month of curbs could slash ¥600bn ($5.55bn) off GDP.
"Instead of staging a V-shaped recovery, the economy could suffer two straight quarters of contraction in April-June," Daiwa Institute analysts wrote in a research note.
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