Abe seeks to boost economy, plans second aid package

Tokyo

THE Japanese government ended its nationwide state of emergency on Monday as cases tail off and announced a decision on funding for a new aid package to help a virus-battered economy.

Prime Minister Shinzo Abe told a news conference on Monday that reviving the economy was now the top priority, and his government will decide on a second extra budget on Wednesday to help people and businesses reeling from the pandemic.

"Every area of the country has met the conditions for ending the emergency, which are extremely strict by global standards," Mr Abe said. "In Japan's own way, we have largely brought the infection under control in a month and a half." Mr Abe said the combined economic measures to be funded by the first and second extra budgets will total over 200 trillion yen (S$2.65 trillion). The prime minister has already said the latest round of help will offer more support to companies through loans and rent subsidies, improved income support for furloughed workers and help for university students.

The first extra budget, which came less than a month ago, helped fund a record 117 trillion yen economic rescue plan, equivalent to more than 20 per cent of GDP.

Mr Abe reminded people to be on guard for a second wave of infections and said that, in the worst case, a state of emergency may have to be reintroduced. Border controls will continue to be tightened, as the virus ravages other parts of the world, he added.

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Mr Abe said professional baseball will start from next month without spectators, and concerts could resume, albeit with crowds of fewer than 100 people. Conditions in each region will be examined every three weeks to determine whether measures can be loosened.

While Japan has suffered far fewer coronavirus infections and deaths than any of its Group of Seven peers, Mr Abe's handling of the outbreak has reinforced concerns that his government has grown complacent after seven years in power. He has been criticised for delaying an emergency declaration when local cases began to surge and for being slow to close Japan's borders to Chinese visitors.

Mr Abe's difficulties provide a warning to other world leaders who, like him, weathered the initial pandemic shock only to be confronted with a historic economic slowdown. Analysts expect Japan's economy to suffer a contraction of almost 22 per cent this quarter, the deepest for records back to 1955.

Mr Abe declared an emergency in the capital and some other areas from April 7, later expanding it nationwide. From mid-May he began lifting it in places where the rate of new infections subsided. The Tokyo region - the worst-hit by the virus - was the final and largest site of infection.

While a European-style lock down isn't legally possible in Japan, the state of emergency enabled local governments to instruct businesses to close or operate for shortened hours, and to ask residents to stay at home.

Tokyo Governor Yuriko Koike has laid out guidelines for reopening the economy as people gradually resume activities kept on hold for almost seven weeks. Some measures will be rolled back starting from Tuesday.

Tokyo reported eight new coronavirus cases on Monday, down from 14 the day before. The total for the past seven days has been below the threshold of 70, or 0.5 people per 100,000, which the government has outlined as being needed to lift the emergency. BLOOMBERG