Japan is helping its post-COVID-19 economic recovery with a further easing of virus-related restrictions, a move that is expected to aid a growth trajectory that has been slower than its peers.
Following a string of national holidays earlier this month, Japan yesterday lowered its classification of COVID-19 to the same level as seasonal flu. The shift, flagged at the beginning of the year, would boost the economy by as much as ￥4.2 trillion (US$31.1 billion) or about 0.75 percent of GDP, Dai-Ichi Life Research Institute executive economist Hideo Kumano said.
Improved productivity, higher domestic consumption and returning foreign tourists are factors that would drive extra growth, Kumano said.
Photo: AFP
He significantly boosted his projections from his January estimate of a ￥1.4 trillion gain to reflect the greater-than-expected recovery in inbound visitors.
Amid continued fears of a global economic downturn, Japan’s slower recovery and delayed border opening could shelter it from an overseas slowdown.
Tourism data suggest that about 1.8 million tourists visited Japan in March, nearly 30 times more than a year earlier and about two-thirds of pre-COVID-19 levels.
The still-weak yen and relatively lower levels of inflation in Japan are drawing in tourists, while the government at the end of last month brought forward the end of its border control measures.
The virus downgrade is also likely to increase productivity, as stay-at-home requests are lifted for those infected or in close contact with people with COVID-19.
An earlier relaxation of mask-wearing recommendations in March appears to have encouraged more people to go out for leisure and dining. Activity in Japan’s service sector rose to the strongest in almost a decade in March.
Japan only narrowly avoided a recession at the end of last year, and economists have become steadily more pessimistic about the global economic outlook as central banks around the world continue to hike interest rates. The reading for Japan’s first quarter is expected to be released next week.
Steady recovery in consumption gives some hope for the Japanese economy amid recent global slowdown fears, Toray Corporate Business Research executive economist Takashi Masuda said.
“Unlike other countries, Japan is still in the process of getting back to normal from the pandemic,” Masuda said. “Thanks to resilient consumption and inbound demand, Japan has less risk of a downturn compared with other countries.”
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