COVID-19: Hurry for masks, wc paper slows Japan's household spending decline
07 April, 2020
Japan's customer spending fell in February but at a slower-than-expected rate as being households scrambled for protective masks, wc paper and staple food amid the worsening coronavirus pandemic.
But spending on travelling and entertainment slumped, government data showed in Tuesday (Apr 7), an indicator households were reducing on non-essential buys even before travel bans and interpersonal distancing policies took impact in March.
Analysts expect the strike to intake from the pandemic to deepen considerably in coming months, seeing that Primary Minister Shinzo Abe declares a state of emergency on Tuesday that's more likely to paralyse activity in key cities, including Tokyo, for per month.
"This pandemic is an unprecedented type of monetary crisis that deals an instantaneous blow to intake and jobs," said Yasuhide Yajima, chief economist at NLI Exploration Institute.
"We'll likely visit a freefall in consumption in March and beyond of a level hardly ever experienced before. In an emergency such as this, Japan has little choice but to embark on helicopter money like other important economies," he said.
Household spending slid 0.3 % in February from a year earlier, marking the fifth straight month of declines but a smaller drop than a median industry forecast for a 3.9% decline and the 3.9 % fall marked in January.
Spending on toilet paper jumped 47 per cent in February right from a year earlier, even though that on domestic bundle tours slumped 37 %.
Supply chain disruptions, travelling bans and community distancing policies triggered by the pandemic have hit Japan's economy, which has already been on the brink of recession, piling pressure in policymakers to take better steps to help ease the pain.
Abe said on Tuesday the government's stimulus bundle to combat the pandemic will be among the world's biggest and would include direct fiscal spending of US$358 billion.
It was the 1st time the premier unveiled how big is direct spending of his package deal, which he said would total 108 trillion yen - add up to 20 % of economic output.
The 39-trillion-yen (US$358 billion) in spending will be more than double what Japan spent to manage the hit to development from the collapse of Lehman Brothers in 2008.
While the stimulus could ease the immediate damage from the pandemic, lawmakers already are calling for a great deal larger spending to prevent bankruptcies and job losses.
With the federal government set to boost bond issuance to cover the package, the lender of Japan could crank up relationship buying to keep borrowing costs low, said Yajima of NLI Research Institute.
Analysts expect Japan's overall economy, which shrank in the final quarter of this past year, to post two more quarters of contraction seeing that the soreness from the pandemic deepens.
Separate data showed inflated-adjusted actual wages rose for another straight month on February, providing some relief for an economy less than risk of a deep downturn above the pandemic.
Source: www.channelnewsasia.com
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