25 May 2020

Japan to end Tokyo's state of emergency

4:49 pm on 25 May 2020

Japan is lifting its state of emergency in Tokyo and other areas, while the Nikkei reported a Covid-19 economic stimulus plan worth almost $1 trillion.

People wearing face masks amid concerns over the spread of the Covid-19 coronavirus, commute on a train in Tokyo on 6 April 2020.

People wearing face masks on a train in Tokyo on 6 April 2020. Photo: AFP

Social distancing curbs were loosened for most of the country on 14 May as new infections fell, but the government had kept Tokyo and four other prefectures under watch.

Japan's economy minister told reporters on Monday local time the government had received approval from key advisers to remove the state of emergency for all remaining regions.

It would be the first time the country has been completely free from the state of emergency since it was first declared a month and a half ago.

"While the emergency state will be lifted, it is important to expand economic activity in stages as we establish a new way of living," Yasutoshi Nishimura said. He added that the head of the advisory panel had recommended close monitoring of Tokyo, Kanagawa and Hokkaido prefectures, where cases had fluctuated.

Japanese Prime Minister Shinzo Abe arrives at his office in Chiyoda Ward, Tokyo on 25 May 2020.

Japanese Prime Minister Shinzo Abe arrives at his office in Chiyoda Ward, Tokyo on 25 May 2020. Photo: AFP

The world's third-largest economy has escaped an explosive outbreak with some 17,000 infections and 825 deaths so far; however, the epidemic has tipped it into a recession and plunged Prime Minister Shinzo Abe's popularity to multi-year lows.

An Asahi newspaper poll conducted at the weekend showed Abe's support rate at 29 percent - the lowest since he returned to power in late 2012 - and disapproval at 52 percent. The results mirrored a Mainichi newspaper survey published on Saturday.

Abe will hold a news conference at 6pm (9pm NZT), followed by a government task force meeting. The lifting of the state of emergency takes effect after the meeting.

Tokyo Governor Yuriko Koike has previously said the capital would move into 'stage one' of loosening restrictions, once the state of emergency was removed. That would allow libraries and museums to reopen, and restaurants to stay open until later in the evening. Subsequent stages would see theatres, cinemas and fairgrounds reopen.

Two-fifths of GDP

To support an economy on track for its deepest slump in postwar history, the Japanese government is considering fresh stimulus worth 100 trillion yen ($NZ1523 billion), mostly comprising financial aid for companies, the Nikkei newspaper said.

The package, to be funded by a second supplementary budget, would follow a record 117 trillion yen ($NZ1782 billion) spending plan deployed last month.

The combined stimulus would bring the total spending in response to the pandemic to about 40 percent of Japan's gross domestic product.

The new package would include 60 trillion yen to expand loan programmes that state-affiliated and private financial institutions offer to firms hit by the Covid-19 coronavirus, the Nikkei said. Another 27 trillion yen would be set aside for other aid including capital injections for ailing firms, the paper said.

The government is expected to approve the budget, which will also include subsidies to help companies pay rent and wages, at a cabinet meeting on Wednesday.

Japan's economy slipped into recession in the last quarter, and analysts expect another 22 percent contraction in April-June.

The deepening pain from the pandemic is forcing the government to add to Japan's huge debt pile, which is already twice the size of its economy, to pay for big spending plans.

The Bank of Japan expanded monetary stimulus for the second straight month in April and pledged to buy as many bonds as needed to keep borrowing costs at zero.

- Reuters

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