Coronavirus Outbreak: Japan’s Machinery Industry Benefits While Country Slides into Recession
Last updated on June 15th, 2020
Following the declaration of state of emergency in Japan amid the coronavirus outbreak, the government revealed that the major core machinery industries’ orders unexpectedly rose to 2.3 percent in February.
Recently, Japanese prime minister Shinzo Abe declared a month-long state of emergency that is expected to negatively impact on the economy of the country.
The rise in core machinery orders followed a 2.9 percent gain in January, which was much better than a 2.7 percent decline predicted by economists.
However, analysts believe the gain is momentary as the economy is slipping into a recession due to the coronavirus outbreak. Furthermore, Japan’s state of emergency would only add to the woes of the world’s third-largest economy.
Itochu Economic Research Institute’s chief economist Atsushi Takeda said, “Few companies will be willing to be aggressive in making capital investments as no one knows how long the deterioration will last. So machinery orders’ sluggishness will naturally continue.”
Amid the coronavirus outbreak, manufacturers witnessed orders dropping for the first time in three months, falling 1.7 percent and dragged down by chemicals and iron and steel. Service-sector orders rose 5 percent, led by gains in the transport and postal business and construction.
While declaring emergency, Abe unveiled a massive one-trillion-dollar stimulus package to soften the economic blow.
During a press conference, Abe said, “It is no exaggeration to say that Japan’s economy, and the world economy, is facing the biggest crisis since post-war right now. We will protect the employment and life at all costs.”
The stimulus package announced by Japan worth 108 trillion yen is more than the 11 percent of US output for President Donald Trump’s stimulus package and the 5 percent of output for Germany’s package. Japan will be selling additional bonds worth more than 18 trillion yen to fund its package – which is a huge debt on the country, almost twice its economy.
While the stimulus package is expected to bring some relief from the coronavirus outbreak, legislators have been asking for more from the government so as to save businesses from bankruptcy and job losses.
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