The COVID-19 pandemic and its impact on the Japanese economy

The article overviews the COVID-19 situation in Japan and its impact on the country's economy. As of the beginning of August 2021, the cumulative cases of coronavirus in Japan reached 0.9 million, of which about 15 thousand were lethal. At the same time, the cumulative cases in the world exceeded 198 million, and deaths - 4.2 million. The top five countries in terms of cumulative cases include the United States, India, Brazil, Russia, and France. According to this indicator, Japan ranks 33^rd in the world. In Japan, the COVID-19 situation is not as serious as in the abovementioned states. However, its economy has also suffered significant damage. Japan's GDP decreased by 4.7 % in 2020 (its decline was estimated in the range from 4.7 to 7.3 %). Three additional budgets to finance anti-crisis packages have increased state budget borrowings. As a result, the share of borrowings amounted to 64.1 %, which is significantly higher than in 2009 (52.1 %) - the year of the global financial crisis. Unemployment increased for the first time in 11 years, and automotive industry, tourism, and public catering were among the industries most affected by the pandemic. The Olympic Games in Tokyo were held without spectators (both foreign and local), and local firms could not gain the 4 trillion yen which was estimated to be the expenses of foreign tourists. The pandemic also had a negative impact on value chains, reducing Japan's foreign trade in the first half of 2020. However, its dynamics recovered quickly. COVID-19 caused an increase in online trade, and also provoked a "restructuring" of the national labor market (due to anti-epidemic measures, the share of remote workers has significantly increased). In general, the pandemic has had a negative impact on the economy and society of Japan. But the national government sees an opportunity in every crisis. Thus, it is expected that one of the consequences of the pandemic will be structural changes in the economy, and local firms will invest more in digitalization and green technologies.

Japan, COVID-19 pandemic, coronavirus, consequences of the pandemic, economic policy, government support measures, foreign trade

1. Белов А.В., Тихоцкая И.С. Первая волна пандемии COVID-19 в Японии: социальные и экономические аспекты // Азия и Африка сегодня. 2020. № 10. С. 14-21. DOI: 10.31857/S032150750011106-8

2. Кистанов В. COVID-19 корректирует внешнюю стратегию Японии // Независимая газета. 31.05.2020. https://www.ng.ru/dipkurer/2020-05-31/10_7874_japan.html (дата обращения: 03.08.2021).

3. Успенская А. Поколение Z против МОК. Как олимпийское движение оказалось в ловушке нового времени, и что может его спасти? //BBC News. 31.07.2020. https://www.bbc.com/russian/features-57957618 (дата обращения: 04.08.2021).

4. Chen, Y. (2020, April 2). Will delaying the Olympics affect Japan's economy? CGTN. Retrieved August 3, 2021, from https://news.cgtn.com/news/2020-04-02/Will-delaying-the-Olympics-affect-Japan-s-economy--PkPmnaSZy0/index.html.

5. Euromonitor Consulting. (2020). Update on Consumer Trends and Lifestyles in Japan and South Korea in Light of the Covid-19 Pandemic. Retrieved August 5, 2021, from https://www.marketopportunities.fi/4a8542/siteassets/market-opportunities/futurewatch_consumer-trends-and-lifestyles-in-japan-and-s-korea-in-light-of-the-covid-19-pandemic.pdf.

6. Goodman, M. & Gerstel, D. (2020, October 28). Comparing U.S., Japanese, and German Fiscal Responses to Covid-19. Center for Strategic and International Studies. Retrieved August 3, 2021, from https://www.csis.org/analysis/comparing-us-japanese-and-german-fiscal-responses-covid-19.

7. Inaba, K. (2021, June 30). From Rebound in Fiscal Year 2021 to Moderate Recovery in Fiscal Year 2022. Japan Center for Economic Research. The 186R Quarterly Forecast. Retrieved August 5, 2021, from https://www.jcer.or.jp/jcer_download_log.php?f=eyJwb3N0X2lkIjo3OTcwMywiZmlsZV9wb3N0X2lkIjo3OTcwNH0=&post_id=79703&file_post_id=79704.

8. International Monetary Fund (2021). World Economic Outlook Update. Retrieved August 5, 2021, from https://www.imf.org/en/Publications/WEO/Issues/2021/07/27/world-economic-outlook-update-july-2021.

9. Ishizaka, S.C.H. & Kojima, M. (2021, January 18). Can Tokyo really stage an Olympic Games? NHK World - Japan. Retrieved August 3, 2021, from https://www3.nhk.or.jp/nhkworld/en/news/backstories/1466/.

10. Ishizaka, S.C.H. (2020, December 8). COVID-19 vaccinations get underway. NHK World - Japan. Retrieved August 3, 2021, from https://www3.nhk.or.jp/nhkworld/en/news/backstories/1412/.

11. Kaneda, M., Kubota, S. & Tanaka, S. (2021, April 7). Who spent their COVID-19 stimulus payment? Evidence from personal finance software in Japan. Covid Economics, 75, 1-29.

12. Kaori, K. (2020, November 13). Japan's GDP seen shrinking less than previously expected this fiscal year: Reuters poll. Reuters. Retrieved August 3, 2021, from https://www.reuters.com/article/us-japan-economy-poll/japans-gdp-seen-shrinking-less-than-previously-expected-this-fiscal-year-reuters-poll-idUSKBN27T0F9.

13. Kihara, L., Kajimoto, T. (2021, May 18). Japan’s economy slumps back into decline as COVID-19 hits spending. Reuters. Retrieved August 5, 2021, from https://www.reuters.com/world/asia-pacific/japans-economy-contracts-more-than-expected-covid-19-hits-consumption-2021-05-18/.

14. Kubota, S., Onishi, K. & Toyama, Y. (2020, December 18). Consumption responses to COVID-19 payments: Evidence from a natural experiment and bank account data. Covid Economics, 62, 90-123

15. Ministry of Economy, Trade and Industry (2021). Quarterly Survey of Overseas Subsidiaries. Retrieved August 5, 2021, from https://www.meti.go.jp/english/statistics/tyo/genntihou/index.html

16. Nakamura, K. (2020, May 5). Japan to help shift manufacturing to ASEAN from China after virus disrupts supply chains. The Japan Times. Retrieved August 3, 2021, from https://www.japantimes.co.jp/news/2020/05/05/business/japan-manufacturing-asean-china-coronavirus-supply-chains/

17. Nakamura, K. (2021, January 4). Focus: Japan economy to notch sharp recovery from pandemic toward end-2021. Kyodo News. Retrieved August 3, 2021, from https://english.kyodonews.net/news/2021/01/1c29429be35e-focus-japan-economy-to-notch-sharp-recovery-from-pandemic-toward-end-2021.html

18. OECD (2021). OECD Economic Outlook. Retrieved August 5, 2021, from https://www.oecd-ilibrary.org/economics/oecd-economic-outlook_16097408

19. Takahashi, R. (2021, March 31). Fourth wave takes shape as COVID-19 cases increase across Japan. The Japan Times. Retrieved August 3, 2021, from https://www.japantimes.co.jp/news/2021/03/31/national/fourth-wave-coronavirus-japan/

20. Takeda, M. (2020, December 11). Japan’s economy not spared in 2020. East Asia Forum. Retrieved August 3, 2021, from https://www.eastasiaforum.org/2020/12/11/japans-economy-not-spared-in-2020/

21. Takumori, A. (2021, January 8). The Japanese Economy in 2021: Pandemic Easing and Gradual Recovery. Nippon.com. Retrieved August 3, 2021, from https://www.nippon.com/en/in-depth/d00663/

22. Yamori, N. & Aizawa, T. (2021, January 7). The impact of the first wave of the COVID-19 crisis on small and medium-sized enterprises and credit guarantee responses: Early lessons from Japan. Covid Economics, 63, 186-200

23. Zhang, H. (2021, March 18). The impact of COVID-19 on global production networks: Evidence from Japanese multinational firms. Covid Economics, 72, 26-67