Risk of global recession? The economy in the new corona ... March 17 20:43

Annual rate minus 2.89%. From January to March, Japan's GDP = average growth rate of gross domestic product estimated by a private economist. GDP has been negative for the second consecutive quarter, and it is increasingly likely that the United States and Europe will enter a phase of recession. Economic indicators such as "the level since the collapse of Lehman Brothers" and "minus since the Great East Japan Earthquake" are also becoming increasingly severe. What will happen to Japan and the rest of the world due to the spread of the new coronavirus? (Keita Kage, Economic Section Reporter Hiroaki Tsuboi)

Drinking street where quaint birds sing

Early March. When you go through the goodwill of an izakaya in Tokyo that you sometimes go to, you usually have only two sets of customers in the restaurant, which is usually full. I was able to talk slowly with the wolf who was always busy.

"I'm full of vacant seats every day at night. The shop next door has closed," laments the wolf. Even if you leave the shop, it is said that people are sparse in the bar area and the singing of the ancient birds continues.

The reason that changed the state of the city was, of course, the spread of the new coronavirus. It has greatly changed our lives and consumption behavior.

What does the new Corona have for the economy?

How bad is the economy? February and March economic indicators are beginning to take effect.

Notable is the drop in department store sales.
At Daimaru Matsuzakaya Department Store, sales from March 1 to 14 fell 43% year-on-year. Sales from March 1 to March 15 were down 34.8% for Isetan Mitsukoshi Holdings and 32.9% for Takashimaya.

The impact on sightseeing is also serious, with the number of airline users decreasing and suspension and reduction of flights continuing. In addition, JR Shinkansen users are decreasing.

Ryokan and hotel reservations have also decreased, and the number of reservations from March to May has decreased by 45% compared to the same period of the previous year (as of February 25, according to the Japan Ryokan Association), and from January to April of 51 bus companies About 11,000 reservations have been canceled (according to the Japan Bus Association on March 3).

In addition to the sharp decline in Chinese tourists, domestic consumers are also increasingly reluctant to go out and spend.

Economic feelings since the Great East Japan Earthquake

Severe current conditions are also apparent in the sense of economy of workers. According to a February economic watcher survey, the index indicating the current situation deteriorated significantly, falling to the lowest level since the Great East Japan Earthquake in 2011.

Clothing specialty store sales in South Kanto "Target is middle-aged and elderly people will not go out. If this situation continues for a long time, there is no choice but to give up management"

Koshinetsu's snack business manager: "The tax hike, typhoon damage caused the bottom, but the new coronavirus continues to cancel. No further reservations will be made."

Izakaya owner in Okinawa "Foreign tourists have been wiped out, local customers are extremely low, and there are no people on the street. Sales have fallen so rapidly that we can not keep up with the cash flow."

In the survey, there were many voices close to screams. If this situation continues, there is a concern that cash financing will become more difficult, especially for small and medium-sized businesses.

Already a serious impact. By March 11, there were eight cases in which companies applied for legal reorganization or shut down their business due to the spread of infection (Teikoku Databank). I am worried that it will not increase further.

Is the Japanese economy recession?

34 private-sector economists analyzed this situation and predicted the growth rate of Japan's GDP = Gross Domestic Product from January to March. The average was announced on March 17th.

The result was a negative 2.89% annualized real rate excluding price fluctuations. It was predicted to be negative for the second consecutive quarter, even lower than last October-December, which was the first negative in five quarters due to the consumption tax hike. In the United States and Europe, a negative for the second consecutive quarter is considered to be a recession.

The state of Japan's economy, which has been arguing for a “gradual recovery” for more than six years, will change dramatically.

Shinichiro Kobayashi, senior researcher at Mitsubishi UFJ Research & Consulting, pointed out:

Dr. Kobayashi: “Someone's self-restraint and self-restraint are expected to lead to a large drop in consumption from January to February and from March to March. The mood has changed dramatically and the stock market has been pessimistic. It's a typical `` global recession, '' as it continues to grow. ''

Even with unusual monetary policy ...

Overseas, the infection has spread rapidly in the United States and Europe recently, and the United States has declared a state of emergency.

In Europe, the Czech Republic and Poland have taken measures to ban foreigners in principle, and Germany has tightened its border controls, and movements to restrict the movement of people are expanding.

In China, the world's second-largest economy with the first spread of infection, the impact on the world economy is getting worse, with predictions from private think tanks that GDP will fall from January to March .

Under these circumstances, countries including Japan are excited to support the economy. The Fed, the US central bank, has decided to hold an extraordinary meeting on Tuesday to cut its policy rate by 1% at a stretch and move to a virtually zero interest rate policy.

Then, on the 16th, the Bank of Japan also held a monetary policy meeting ahead of schedule and decided on additional monetary easing for the first time in three and a half years. Countries are also stating that they will increase their fiscal spending to support hit companies and individuals.

In Japan, too, the government and ruling party are planning to consider additional economic measures in earnest, with a view to formulating a supplementary budget for the new fiscal year. However, despite the governments and central banks taking action, the financial markets have not ceased, as record stock prices have continued to fall.

While ending the spread of infection is undoubtedly the most effective measure, no one can tell for sure when it will be.

With unusual monetary policy unable to change the situation where anxiety is causing anxiety, can the Japanese government come up with effective economic measures? Also, is it possible to balance the spread of infection with the support of the economy? We have to deal with difficult things.

Ministry of Economic Affairs reporter Keita Kage Joined in 2005 Joined Yamagata Bureau Sendai Bureau

Hiroaki Tsuboi, Ministry of Economic Affairs reporter