April 16, 2020 at 14:02 JST
For someone like Sumako Furihata, who owns two small restaurants in Tokyo’s Akasaka nightlife district, the coronavirus pandemic has been a nightmare that crushed sales and put her in a difficult situation.
Many of her rivals in the district, which relies on lunch and dinner demand from business workers, are also suffering as more companies have employees work from home at the government’s request.
“The pace of fall in sales is much faster than during the global financial crisis,” said Furihata, who has temporarily shut down one of her restaurants.
The pandemic has damaged an economy already on the brink of recession as social distancing policies prompted sectors such as transport, retail and tourism to temporarily scale down.
And the virus outbreak may increase deflationary pressure in Japan as people stay at home more and spend less.
“Prices for ‘stay-at-home’ related products such as foods are firm. But overall, there’s an increasing risk Japan may slip back into deflation,” said Hiroshi Ugai, chief economist at JPMorgan Securities Japan.
Ugai, who predicts Japan’s economy will contract 4.4 percent this year, warns that prices for a range of goods will start falling around autumn.
An early snapshot of how Japanese businesses coped with the outbreak in March showed that retailers like Furihata were hit hardest, while other sectors got some respite.
The Nowcast private survey that captures real-time consumption trends--making it a leading indicator of government data--showed consumer spending index falling nearly 10 percent for hotels, about 28 percent for amusement parks, 14 percent for airplane tickets and more than 16 percent for train tickets during March 16-31, compared with a year earlier.
Many suffered from the government’s decision this month to declare a state of emergency for major population centers, including Tokyo, to combat the virus. The declaration urged citizens to stay at home, some facilities to shut down and restaurants to close early.
Movement of people around Tokyo station, a major transportation hub, dropped nearly 50 percent on April 15 from levels before the state of emergency announcement on April 7, according private data firm Agoop.
The number of people using major train stations such as Tokyo, Shinjuku and Ueno dropped more than 70 percent on April 13 from a year earlier, and that of western Osaka station fell more than 60 percent, according to data compiled by the government.
There were some areas that were less affected, or even saw demand rise because of social distancing and work-from-home policies.
Coffee shops saw consumption increase more than 4 percent on demand from employees visiting cafes while teleworking.
Liquor shops saw spending rise 10 percent as bars closed. Supermarkets saw more than a 14 percent rise in consumption, as they catered to households preparing more food at home.
But overall, prices are being pushed down.
Already, Japan is seeing bankruptcies creep up, particularly in the service sector. If the pandemic persists, the number could spike and lead to more job losses. That would give households less to spend and fewer things to buy, thus putting more downward pressure on prices, analysts say.
“If the number of unemployed rise, that will leave households with less purchasing power. That puts downward pressure on overall prices,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Even if prices creep up, it could be for the wrong reasons. If the pandemic keeps factories in the world’s third-largest economy from resuming operations for too long, that could hamper companies from producing enough goods.
“If companies need to scale down production lines for daily necessities, supply could shrink and prices of those produce may rise,” Minami said.
The Asahi Shimbun aims “to achieve gender equality and empower all women and girls” through its Gender Equality Declaration.
Let’s explore the Japanese capital from the viewpoint of wheelchair users and people with disabilities with Barry Joshua Grisdale.
This special page portrays the dramatic arrest of Carlos Ghosn and the twists and turns that followed.
This special page reviews what the former Nissan Motor Co. chairman left during his 19 years in Japan.
Baseball star Ichiro Suzuki had much to say on March 21, 2019, the day he hung up his spikes.
This special page details how journalists uncovered shady transactions through Bermuda and other tax havens.