Japan eyes big stimulus package to battle hit from virus

A couple, wearing protective masks following an outbreak of the coronavirus disease, poses for a photo at Kiyomizu-dera Buddhist temple in Kyoto, Japan March 15, 2020. — Reuters pic
A couple, wearing protective masks following an outbreak of the coronavirus disease, poses for a photo at Kiyomizu-dera Buddhist temple in Kyoto, Japan March 15, 2020. — Reuters pic

TOKYO, March 18 — Japanese Prime Minister Shinzo Abe will form a panel of ministers tomorrow to lay out a package to help the economy weather the hit from the coronavirus outbreak, the government said today.

Countries around the world have been preparing more costly measures to combat the global fallout from the coronavirus pandemic that has sent economies tumbling towards recession.

The Japanese panel’s discussions will lay the groundwork for a stimulus package the government plans to launch in April, which Abe had said would include “bold and unprecedented” steps.

“We have economic data. But we’d like to get a sense on what is happening on the ground” by hearing from companies, industries and households feeling the pinch from the coronavirus outbreak, Economy Minister Yasutoshi Nishimura told reporters.

Bank of Japan Governor Haruhiko Kuroda stressed the central bank’s resolve to ease monetary policy again if the economy worsens further from the fallout of the epidemic.

“If it takes long to contain the virus, that could have a severe impact on the economy. If so, we will of course take additional monetary easing steps without hesitation,” he said on Wednesday, keeping expectations alive for another bout of stimulus as early as next month.

The panel, which will include Nishimura, Finance Minister Taro Aso and others, will summon corporate executives from a range of industries hit by the epidemic such as hotels, retailers and freelancers, the government said in a statement.

About 60 individuals will be invited to speak in seven rounds of meetings, Nishimura said.

Olympics as scheduled

The epidemic has hit Japan’s economy, already reeling from last year’s sales tax hike and soft global demand, heightening the chance of a recession and stoking speculation the Tokyo Olympic Games may be cancelled or postponed.

“We’re not making any adjustments to postpone the Games,” the government’s top spokesman Yoshihide Suga said, stressing Tokyo’s resolve to host the event as planned.

As of this morning, Japan had 29 deaths and 868 coronavirus cases, excluding those from a cruise ship that was quarantined near Tokyo last month and returnees on chartered flights from China, a tally by public broadcaster NHK showed.

In a bid to calm the markets, the BOJ eased monetary policy by increasing its risky asset purchases in an emergency meeting on Monday.

But that did little to turn around market sentiment soured by worries over the coronavirus outbreak. The yen — sought as a safe haven — rose and Japan’s Nikkei share average fell to its lowest finish since 2016 today.

Given the BOJ’s depleted ammunition, the onus is now on fiscal policy to deal with the blow from the epidemic that has cooled consumption through school shutdowns, travel restrictions and event cancellations, analysts say.

As the Trump administration eyes US$1 trillion (RM4.4 trillion) in stimulus, Japan’s ruling party lawmakers are calling for tax cuts and a spending package of up to 30 trillion yen — roughly equivalent in population terms. Abe has said he will take the proposal into account.

“It’s true we need to take various, bold steps,” finance minister Aso said, though he brushed aside proposals by some lawmakers to cut the 10 per cent sales tax rate.

He also said Japan had no immediate plan to offer cash payouts to households, denying a media report the idea could work its way into the stimulus package. — Reuters

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