Economic Policy of Japan in the Time of Pandemic

Abstract

In the initial period of the COVID-19 pandemic (February-September 2020), Japan succeeded in minimizing the mortality rate and reducing the damage to the economy The Japanese experience has both positive and negative aspects Among the G7 countries, Japan recorded the best use among the states of East Asia the worst indicators of overall and excessive mortality From an economic perspective, the pandemic strongly affected inbound and outbound tourism, which will take years to recover Employment opportunities in the tourism and other contact-intensive industries will be reduced by approximately one million jobs, primarily affecting part time and temporary workers At the same time, the overall unemployment rate will hardly exceed one-third of the OECD average generally because of the ample financial support, long-term commitments among core employees in Japan, and job retention practices of domestic companies In the macroeconomic realm, the Japanese government embarked on an extension of quantitatively easing measures of monetary expansionary steps in fiscal sphere and universal stimulus in growth-enhancing structural policies This approach actually follows the logic of a long-standing reflationary Abenomics, which is expected to continue despite the abrupt resignation of S Abe At least, Japan’s newly elected Prime Minister Yo Suga has indicated his support for current monetary and fiscal policies He also hinted at a need to reduce the administrative red tape and to accelerate the digitalization in the economy The package of anti-crisis measures in Japan turned out to be one of the largest in the world, and its implementation could increase the budget deficit and public debt, that is, cause the emergence of problems relevant to most other countries © 2021, Russian Academy of Sciences All rights reserved