The record decline in the nation's economy has also become clear statistically. The government must implement all possible measures to balance containment of the novel coronavirus with economic activities.
The preliminary report on real gross domestic product for the April-June period marked an annualized 27.8% decline from the previous quarter. The margin of decline was the largest since the end of World War II.
Due to the government's declaration of a state of emergency and other factors, requests spread for people to refrain from going out or holding events, and economic activities stagnated. This is the result of putting top priority on measures to prevent infections, which was unavoidable. By and large, the United States and major European countries have marked greater negative growth than Japan.
It is necessary to closely examine the impact of the coronavirus on the economy and use the findings for future reconstruction of the economy.
Personal consumption, which accounts for more than 50% of the GDP, decreased 8.2% from the previous quarter. Consumption of services, such as travel and dining out, plunged. Investment in plants and equipment decreased 1.5%, as companies apparently postponed investment due to uncertain economic trends.
Reflecting the deterioration in overseas economies, exports dropped 18.5%. Exports of automobiles and other goods slumped, and the sharp drop in consumption by foreign visitors to Japan, which is included in exports, also contributed to the overall decline.
Since July, infections have once again been rising in Japan and abroad. As a rapid recovery in exports is unlikely, it is important to make efforts to shore up domestic demand for the time being.
If many people remain afraid of infections, it will be difficult to boost consumption. The government should focus on alleviating public anxiety. It is urgently necessary to secure the medical system and expand polymerase chain reaction (PCR) tests to enable a correct understanding of the situation involving virus infections.
To continue business operations, an increasing number of companies are having employees tested at the company's own expense. The government should financially help small and midsize companies secure the funds for testing, if necessary.
It is also important to stabilize employment. Regarding the government's employment adjustment subsidies to support companies' payments of allowances to workers who have been put on leave, the period during which the government is implementing special measures, including raising the upper limit, will expire at the end of September. The government needs to protect employment by extending the employment adjustment subsidies system.
It is hoped that the large reserve funds earmarked in the second supplementary budget will be effectively used.
It is desirable to smoothly help companies procure funds and reinforce capital to prevent them from going bankrupt, and pay particular attention to industries that have been hit hard, such as restaurants and tourism.
The fight against this infectious disease is expected to be prolonged. The government should not hesitate to take additional economic measures depending on the situation.
It is essential for the government to take steps for the next type of growth. Demand has grown in some areas due to the establishment of teleworking and so-called nesting consumption. In addition to online shopping and home delivery services, information technology-related businesses are booming. It is urgent to improve the infrastructure of the 5G standard, which enables high-speed, large-capacity communications.
Hopefully, the government will rework its strategy with an eye on the changes in the structure of industries.
-- The original Japanese article appeared in The Yomiuri Shimbun on Aug. 18, 2020.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
