Abe says gov't ready to protect economy from coronavirus impact
01 March, 2020
Japanese Prime Minister Shinzo Abe pledged on Friday to take policy steps as had a need to avoid the coronavirus outbreak from dealing a severe blow to the country's fragile economical recovery.
Abe said the federal government still had satisfactory reserves to tap for emergency spending linked to the coronavirus epidemic, signalling that he saw no immediate need to compile a fresh spending package.
"But I'm aware of views that if the virus spreads, it might have a huge effect on the economy," Abe told parliament. "We're therefore watching developments carefully."
"If developments change, we'll ensure to take steps as needed to avoid the virus from becoming a huge downside risk to Japan's economy," he said.
Japan's economy shrank at its speediest pace in almost six years in the December quarter, as soft global demand and last year's sales tax hike hurt consumption and business spending.
Some analysts expect the economy to shrink again in today's quarter and put on recession - thought as two straight quarters of contraction - as the virus disrupts supply chains, triggers cancellation of events and keep shoppers home.
"It's true Japan's economy is in a fairly tough condition," due to cancellations of varied events," economy minister Yasutoshi Nishimura told parliament on Friday. "However the priority now is to avoid the virus from spreading."
Asian stocks tracked another overnight plunge in Wall Street's benchmarks on Friday with markets in China, Japan and South Korea all posting heavy losses on fears the coronavirus would turn into a pandemic and derail economical growth.
A senior Japanese finance official said on Friday that market movements were reflecting the "shock" of the brand new coronavirus spreading, but refrained from commenting on specific market moves.
Abe's administration has centered on stock price moves as a barometer of success of its "Abenomics" stimulus policies aimed at reflating the economy.
Market moves are also seen by investors as an integral trigger for additional monetary easing by the lender of Japan.
Japan's government compiled a fiscal spending package late last year to counter the hit to exports from soft global demand. However, many ruling party lawmakers are starting to demand fresh spending given the damage from the epidemic.
Having used up almost all of its ammunition, however, the central bank appears reluctant to deploy additional stimulus - at least for the present time.
"I don't believe the BOJ must take additional monetary easing steps now in response to the coronavirus outbreak," said Goushi Kataoka, just about the most dovish members of the central bank's board.
"We need to first look at how serious the impact from the outbreak will be," he told reporters on Thursday.
Source: japantoday.com