APD | Covid-19 could cost Japan GDP of 1 trillion yen

By APD writer Alice

The latest analysis of research institutes in Japan shows that the acute respiratory disease caused by a new strain of coronavirus (Covid-19) can cause serious damage to Japan, the world’s third largest economy.

The Daiwa Research Institute predicted that in the most optimistic scenario when Covid-19 is eliminated within the next three months, this epidemic will still "take" 1 trillion yen (over 9 billion USD) of Japan's GDP in 2020. The number of Chinese visitors to the country could drop by 1 million.

In case that the epidemic lasts one year, the institute said Japan's exports would plummet due to the economic downturn in China. In such a scenario, Covid-19 will cause Japan's GDP to decrease by nearly 1%.

Despite being more optimistic, the Nomura Research Institute also forecast Japan's GDP will decrease by nearly 0.5% if the epidemic lasts one year. The decline in the number of foreign visitors to Japan alone makes the country's GDP fall by 0.14% in the most optimistic scenario when Covid-19 is curbed in the next few months.

Meanwhile, Meiji Yasuda Life Insurance Company seems the most optimistic when estimating Japan's GDP will drop by 0.1% if the dangerous virus is contained in the next few months. If the epidemic persists over a year, Japan's GDP will decline by 0.18%.

Also relating to the acute respiratory disease caused by the new strain of coronavirus, on February 10, Japanese Minister of Land, Infrastructure, Transport and Tourism (MLIT) Kazuyoshi Akaba said the number of recurring flights between Japan and China have plunged by 60% due to the disease impact and will probably fall even more if the epidemic persists.

According to Akaba, in the first ten days of February, many tour operators had to cancel tours as 13 out of 14 foreign-flagged yachts could not dock in Japan.

In this context, Minister Akaba forecast that Covid-19 would cause serious damage to the country's tourism industry and related businesses are in a very difficult situation. Therefore, the Government of Japan intends to include support measures for businesses in the tourism sector into an emergency support package that the Government is drafting.

(ASIA PACIFIC DAILY)