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Japan Falls Into Recession, and Worse Lies Ahead Japan Falls Into Recession, and Worse Lies Ahead
(8 days later)
Japan fell into a recession for the first time since 2015, as its already weakened economy was dragged down by the coronavirus’s impact on businesses at home and abroad.Japan fell into a recession for the first time since 2015, as its already weakened economy was dragged down by the coronavirus’s impact on businesses at home and abroad.
The world’s third-largest economy after the United States and China shrank by an annualized rate of 3.4 percent in the first three months of the year, the country’s government said on Monday.The world’s third-largest economy after the United States and China shrank by an annualized rate of 3.4 percent in the first three months of the year, the country’s government said on Monday.
That makes it the largest economy to officially enter a recession, often defined as two consecutive quarters of negative growth, in the coronavirus era. Other major economies around the world are set to follow, joining Japan as well as Germany and France in recession, as efforts to contain the outbreak ripple around the globe. The experiences of China, where the outbreak first emerged in December and January, suggest recovery will be long and difficult.That makes it the largest economy to officially enter a recession, often defined as two consecutive quarters of negative growth, in the coronavirus era. Other major economies around the world are set to follow, joining Japan as well as Germany and France in recession, as efforts to contain the outbreak ripple around the globe. The experiences of China, where the outbreak first emerged in December and January, suggest recovery will be long and difficult.
Japan will find it no easier. Initial figures for the April-to-June period show its economy will be slammed by efforts to contain the outbreak.Japan will find it no easier. Initial figures for the April-to-June period show its economy will be slammed by efforts to contain the outbreak.
“The economy entered the coronavirus shock in a very weak position,” said Izumi Devalier, chief Japan economist at Bank of America Merrill Lynch, but “the real big ugly stuff is going to happen in the April, June print. It’s going to be three quarters of very negative growth.”“The economy entered the coronavirus shock in a very weak position,” said Izumi Devalier, chief Japan economist at Bank of America Merrill Lynch, but “the real big ugly stuff is going to happen in the April, June print. It’s going to be three quarters of very negative growth.”
Ms. Devalier added, “It’s not a very encouraging picture.”Ms. Devalier added, “It’s not a very encouraging picture.”
Businesses had already been staggering before the coronavirus hit.Businesses had already been staggering before the coronavirus hit.
Consumer spending dropped after the Japanese government in October increased a tax on consumption to 10 percent from 8 percent, a move that Prime Minister Shinzo Abe’s administration said would help pay down the national debt — the highest among developed nations — and fund the growing demand for social services as the country’s workers age.Consumer spending dropped after the Japanese government in October increased a tax on consumption to 10 percent from 8 percent, a move that Prime Minister Shinzo Abe’s administration said would help pay down the national debt — the highest among developed nations — and fund the growing demand for social services as the country’s workers age.
Days later, a typhoon slammed into the country’s main island, inflicting enormous damage and further driving down economic activity.Days later, a typhoon slammed into the country’s main island, inflicting enormous damage and further driving down economic activity.
Even before that, Japanese export numbers had fallen steadily all last year on slowing global demand and the fallout from the U.S.-China trade war.Even before that, Japanese export numbers had fallen steadily all last year on slowing global demand and the fallout from the U.S.-China trade war.
The situation has only worsened this year. The outbreak crushed Japan’s exports, forced it to postpone the Olympics and then put the country on a soft lockdown as it joined other nations scrambling to stop the coronavirus.The situation has only worsened this year. The outbreak crushed Japan’s exports, forced it to postpone the Olympics and then put the country on a soft lockdown as it joined other nations scrambling to stop the coronavirus.
“The emergency declaration stopped people from going out, leading to a substantial decline in consumption,” said Kentaro Arita, a senior economist at the Mizuho Research Institute, a think tank in Tokyo. Now, he said, “it is going to be impossible to avoid an impact on the scale of the global financial crisis or even worse.”“The emergency declaration stopped people from going out, leading to a substantial decline in consumption,” said Kentaro Arita, a senior economist at the Mizuho Research Institute, a think tank in Tokyo. Now, he said, “it is going to be impossible to avoid an impact on the scale of the global financial crisis or even worse.”
Schools shut down, the country closed itself off to most of the world and, in mid-April, Mr. Abe declared a national state of emergency that led many people to stay home from work and businesses to close.Schools shut down, the country closed itself off to most of the world and, in mid-April, Mr. Abe declared a national state of emergency that led many people to stay home from work and businesses to close.
On the health front, the efforts seem to have paid off. Cases rose briefly before receding. The country’s health system never became overwhelmed. The total number of deaths attributed to the outbreak was under 750 as of Sunday, far lower than in other major developed nations.On the health front, the efforts seem to have paid off. Cases rose briefly before receding. The country’s health system never became overwhelmed. The total number of deaths attributed to the outbreak was under 750 as of Sunday, far lower than in other major developed nations.
But each of those decisions had a profound economic impact. School closures forced parents to stay home from work and hammered farms and dairies that make their living selling ingredients for school lunches. Canceling foreign visas obliterated tourism and stopped a source of critical foreign labor. The emergency declaration has slowed or stopped work at many large companies and devastated the country’s many small and midsize enterprises, particularly those in the service sector.But each of those decisions had a profound economic impact. School closures forced parents to stay home from work and hammered farms and dairies that make their living selling ingredients for school lunches. Canceling foreign visas obliterated tourism and stopped a source of critical foreign labor. The emergency declaration has slowed or stopped work at many large companies and devastated the country’s many small and midsize enterprises, particularly those in the service sector.
For more than a month, Tokyo’s bustling business districts have been largely shuttered. Foot traffic dropped by 70 percent at the world’s busiest train station in Shinjuku, according to a report by NHK, the public broadcaster. Tourist sites across the city that are normally thronged with visitors have been eerily quiet.For more than a month, Tokyo’s bustling business districts have been largely shuttered. Foot traffic dropped by 70 percent at the world’s busiest train station in Shinjuku, according to a report by NHK, the public broadcaster. Tourist sites across the city that are normally thronged with visitors have been eerily quiet.
Last week, the streets of the trendy Harajuku shopping district — which typically attracts shoulder-to-shoulder crowds in good weather — were largely empty, with just a few pedestrians walking by boutiques that had closed or drastically cut back their hours.Last week, the streets of the trendy Harajuku shopping district — which typically attracts shoulder-to-shoulder crowds in good weather — were largely empty, with just a few pedestrians walking by boutiques that had closed or drastically cut back their hours.
Recent data hints at the likely severity of the hit to the current quarter’s growth.Recent data hints at the likely severity of the hit to the current quarter’s growth.
Visitors to Japan in March dropped by 93 percent year-on-year to just over 190,000 people, according to the Japan National Tourism Organization. April’s consumer confidence index plummeted to a lower reading than in the aftermath of the 2008 financial crisis or the 2011 Fukushima nuclear meltdown. Exports dropped by more than one-fifth in the first 20 days of the month alone. A monthly survey of economic watchers reached a historic low, concluding that “the already extremely severe economic conditions due to the impact of the coronavirus will worsen further.”Visitors to Japan in March dropped by 93 percent year-on-year to just over 190,000 people, according to the Japan National Tourism Organization. April’s consumer confidence index plummeted to a lower reading than in the aftermath of the 2008 financial crisis or the 2011 Fukushima nuclear meltdown. Exports dropped by more than one-fifth in the first 20 days of the month alone. A monthly survey of economic watchers reached a historic low, concluding that “the already extremely severe economic conditions due to the impact of the coronavirus will worsen further.”
April may prove to be the nadir.April may prove to be the nadir.
On Friday, Mr. Abe announced he was lifting the state of emergency on all but eight of the country’s prefectures earlier than initially expected — a move that could give the economy a boost. The government will decide on next steps for the remaining areas, which include the economic powerhouses Tokyo and Osaka, within the month.On Friday, Mr. Abe announced he was lifting the state of emergency on all but eight of the country’s prefectures earlier than initially expected — a move that could give the economy a boost. The government will decide on next steps for the remaining areas, which include the economic powerhouses Tokyo and Osaka, within the month.
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
Still, it could still be a long time before economic activity returns to anything approaching what it was, according to Sayuri Shirai, a professor of economics at Keio University in Tokyo and a former board member of the Bank of Japan.Still, it could still be a long time before economic activity returns to anything approaching what it was, according to Sayuri Shirai, a professor of economics at Keio University in Tokyo and a former board member of the Bank of Japan.
Tourism, which has been a small but important driver of growth, could take years to rebound, she said. Businesses such as hotels and restaurants that had taken out loans in anticipation of the Olympics might now find themselves unable to meet their obligations.Tourism, which has been a small but important driver of growth, could take years to rebound, she said. Businesses such as hotels and restaurants that had taken out loans in anticipation of the Olympics might now find themselves unable to meet their obligations.
“Depending on the sectors that were generating economic growth before Covid-19 will not be possible in the coming years,” she said.“Depending on the sectors that were generating economic growth before Covid-19 will not be possible in the coming years,” she said.
“For many years, I think private sector activity will be very weak. That means the government will have to continue to support economic activity.”“For many years, I think private sector activity will be very weak. That means the government will have to continue to support economic activity.”
The government has already approved a $1.1 trillion stimulus package, a sum that would have seemed large a year ago. But with the United States having already committed nearly twice that amount to prop up its economy, Japan — which in the past was often criticized for its use of debt-funded stimulus — is in the unusual position of being chided for not spending enough on its recovery plan.The government has already approved a $1.1 trillion stimulus package, a sum that would have seemed large a year ago. But with the United States having already committed nearly twice that amount to prop up its economy, Japan — which in the past was often criticized for its use of debt-funded stimulus — is in the unusual position of being chided for not spending enough on its recovery plan.
Mr. Abe on Thursday said the government was discussing more measures to prop up the economy.Mr. Abe on Thursday said the government was discussing more measures to prop up the economy.
Job losses might be stemmed by Japan’s tight labor market and by rigid hiring practices that make it difficult to lay off employees. But keeping people in jobs is not sufficient to guarantee that domestic demand will recover, according to Ms. Devalier, of Bank of America Merrill Lynch.Job losses might be stemmed by Japan’s tight labor market and by rigid hiring practices that make it difficult to lay off employees. But keeping people in jobs is not sufficient to guarantee that domestic demand will recover, according to Ms. Devalier, of Bank of America Merrill Lynch.
“Even though Japan will come out much better than other countries, particularly the United States, when it comes to the loss in employment, it doesn’t mean there hasn’t been a shock to wages and income and sentiment,” she said.“Even though Japan will come out much better than other countries, particularly the United States, when it comes to the loss in employment, it doesn’t mean there hasn’t been a shock to wages and income and sentiment,” she said.
Those conditions can create an “adverse feedback loop,” Ms. Devalier said, where a weak recovery in demand makes people more cautious, driving down demand further.Those conditions can create an “adverse feedback loop,” Ms. Devalier said, where a weak recovery in demand makes people more cautious, driving down demand further.
To avoid that, she said, will require more assistance for households and businesses: “It just comes down to the fact that the government is going to have to do more.”To avoid that, she said, will require more assistance for households and businesses: “It just comes down to the fact that the government is going to have to do more.”
Makiko Inoue contributed reporting.Makiko Inoue contributed reporting.