Japan and particularly Tokyo has been accused of not reacting to the Covid-19 pandemic with similar haste to most other countries. A spike in bankruptcies, led unfortunately from casualties in the hospitality industry, has seen the Government add some impetus to minimise the impact.
Business analytics and commentary firm Tokyo Shoko Research said yesterday that the recent spike was only underlining the toll the health crisis is taking on the third largest economy in the world.
The bankruptcies were mostly in the hotel and restaurant industries such as hot spring hotel operator Fujimi-so in Aichi, the credit research firm said in its latest report. A spokesperson was quoted saying: “If the impact persists, bankruptcies could spread not just among small firms with weak business foundations, but medium-term companies.” Unfortunate use of descriptive language but it does convey the message.
Shinzo Abe, Japan’s Prime Minister has only last week declared a state of emergency on Tuesday for Tokyo and six other areas, after a steep rise in Codid-19 casualties in Tokyo. He also voiced his concern that Japan was headed for the sort of explosive outbreak seen in other countries.
The number of coronavirus cases in Japan rose to 5,548 on Thursday, with 108 deaths, NHK said. Tokyo accounted for 1,519 cases, heightening concerns about sluggish action.
Japan’s government is not considering asking the Bank of Japan now to finance its debt boosted by stimulus to contain the economic fallout from the coronavirus, Japan’s Finance Minister, Taro Aso said on Friday.
His comment was in response to a remark at a news conference, when asked about following the UK and the Bank of England by underwriting government debt to fund the cost of its Covid-19 stimulus.
Given that the US as well as the UK have both exercised substantial and much needed government led financial stimulus, it will be interesting to see what the Japanese alternative will be.