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Japan’s state of emergency is seen having limited impact on the economy

  • Japanese Prime Minister Yoshihide Suga declared a state of emergency in Tokyo and three other areas on Thursday in a bid to combat a rise in coronavirus infections.
  • The state of emergency looks set to be expanded to more areas, with local media reports that Suga will add seven more prefectures, including Osaka.
  • Oxford Economics cited several factors to explain the limited economic impact, including business restrictions that are mainly targeted only at restaurants and bars in the areas under the state of emergency.

People walk at Shibuya Station in Tokyo, Japan, Jan. 9, 2021.Du Xiaoyi | Xinhua via Getty

SINGAPORE — Japan's latest declaration of a state of emergency in parts of the country is unlikely to take a major toll on the economy, economists told CNBC.

"The economic impact of the announced measures will be smaller compared to the last episode," Shigeto Nagai, head of Japan economics at research firm Oxford Economics, told CNBC in an email.

He was referring to Japan's nationwide state of emergency declared in April 2020, in the earlier days of the coronavirus pandemic. The state of emergency at the time ended in late May.

This latest state of emergency in Tokyo, Saitama, Chiba and Kanagawa till Feb. 7 was announced by Japanese Prime Minister Yoshihide Suga last week, in a bid to combat the latest surge in coronavirus infections.

The state of emergency is set to be expanded to more areas, with local media reports that Suga will add seven more prefectures, including Osaka.

Japan has recorded more than 298,000 confirmed Covid-19 infections while at least 4,192 lives have been taken by the disease, according to data from public broadcaster NHK.

Limited impact on Japan

Oxford Economics' Nagai cited several factors to explain the limited economic impact, including business restrictions that are mainly targeted only at restaurants and bars in the areas under the state of emergency.

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