People are reflected on the electronic board of a securities firm in Tokyo, Wednesday, March 18, 2020. (AP Photo/Koji Sasahara)
TOKYO (Kyodo) — Hit hard by the coronavirus outbreak, Japan’s economy faces its biggest challenge in more than a decade, with analysts warning of a technical recession and even the worse if this summer’s Tokyo Olympics is cancelled.
The epidemic has also hurt the credibility of Abenomics, a policy mix adopted by Prime Minister Shinzo Abe after he took office in 2012, which the government says has helped, together with a robust stock market, expand the economy.
But as the Bank of Japan is widely seen as running short of policy tools to further boost the economy after years of massive monetary easing, Abe is now forced to turn to state coffers for budgetary stimulus as large as the one offered in the 2008-2009 global financial crisis, even though it could deteriorate the country’s fiscal health.
“It’s possible Japan will slip into its worst recession since the 2008 crisis,” said Toshihiro Nagahama, chief economist at the Dai-ichi Life Research Institute.
Nagahama is one of those calling on the government to reduce consumption tax from 10 percent back to 8 percent on all products — not just food and daily items — as a provisional measure until the economy returns to normal.
Ahead of the tax hike, Abe and other ruling party lawmakers repeatedly said the increase would be nixed if the economy faced a situation as serious as the financial turmoil.
The Japanese economy shrank an annualized real 7.1 percent in the October-December period as the higher tax dented consumer spending. And it could further contract in the current quarter through this month, entering a technical recession, defined as at least two consecutive quarters of declining gross domestic product.
First-quarter GDP is expected to contract 2.9 percent, according to the average estimate of 34 economists surveyed by the Japan Center for Economic Research, as the viral outbreak has disrupted production and exports and cast a shadow over the global economic outlook.
The government’s policy of restricting public events to prevent infections “is causing great damage” to the economy, Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc., said.
The worldwide spread of the virus has also threatened the Tokyo Olympics, slated to begin on July 24. Abe still hopes the games will help sustain a tourism boom in Japan and support growth.
Amid growing speculation that the event could be postponed for a year or two, or even be cancelled, analysts have started simulating tremendous losses to the economy.
“If it’s cancelled, the damage would be unmeasurable. This could also deteriorate public sentiment significantly,” said Nagahama.
The focus is on how large the next fiscal stimulus by the government will be.
Following the financial crisis, the government unleashed an emergency policy package worth 57 trillion yen ($513 billion) in April 2009 to shield the economy from negative fallouts under then Prime Minister Taro Aso, who is now finance minister.
The upcoming package, which Abe aims to put together early next month, could match the 2009 stimulus in size, some analysts said.
To buoy household spending, the emergency steps are likely to include cash handouts, extension of a government reward points program for cashless payments, as well as lowering the just-hiked consumption tax rate, sources close to the matter said.
Austerity is also in focus, however.
Abe has already introduced policy packages worth more than 1 trillion yen to fight the coronavirus, in addition to the 26 trillion yen stimulus launched in December to address shocks from the Oct. 1 tax hike.
The latest measures will likely be financed under a supplementary budget for fiscal 2020 with the government issuing new debt, adding to pressure on Japan’s fiscal health, the worst among major developed countries.
But Maruyama said, “Now is the time to temporarily shelve the viewpoint of fiscal discipline, and to give priority to putting the economy back on a growth path.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
