Japan: Further measures to contain the pandemic – UOB

Senior Economist at UOB Group Alvin Liew reviews the latest measures from the Japanese government regarding the coronavirus pandemic.

Key Quotes

“Japan announced on Wednesday (13 Jan) the decision to expand the state of emergency coverage amid a continued rise in COVID-19 infection cases. There will now be 11 prefectures under emergency declaration, covering 55% of Japan’s population of 126 million and generating nearly 60% of Japan’s overall GDP.”

“The latest state of emergency is set to last through 7 Feb but it is of a much narrower in scope compared to the first nationwide state of emergency (April-May 2020), so the impact on GDP will be marginal (-0.1% to -0.2% of 2021 GDP growth in our estimate) unless the state of emergency is extended and the measures are further tightened with the coverage being expanded (to nationwide). The offsetting factor will be the Japan government’s most recent JPY 73.6 trillion (US$708bn) third stimulus package.”

“For now, (at least till March 2021), we have not changed our view and we still expect the BOJ to do more and enhance its monetary policy easing further, most likely through increasing its JGB purchases and expanding its lending facilities to Japanese corporates and SMEs, possibly in the 20/21 January 2021 MPM.”