Tokyo to Stay Under Virus Emergency Even as Japan Eases

(Bloomberg) -- Japanese Prime Minister Shinzo Abe will maintain a state of emergency for Tokyo and Osaka due to the coronavirus while lifting it for 39 of the country’s 47 prefectures earlier than scheduled, as infection cases have waned.

Abe also told a news conference Thursday that the government will immediately start work on a second extra budget to aid people and businesses reeling from the effects of the pandemic. The plan will include handouts to help with rent, and raise the maximum subsidy for furloughed workers to 15,000 yen ($140) a day, he said.

“This is a once-in-a-century crisis,” Abe said, adding that the new package would also include an increase of subsidies to regions and aid to students.

He later told his virus task force he aims to decide on the size of the budget on May 27 and to submit it to parliament quickly. The government plans to support companies of all sizes by bolstering loan facilities, he said.

Infection numbers were in decline in Japan but there is a still a risk for major urban areas, Abe said, adding that people should continue to avoid traveling to other parts of the country and stay away from risky places like bars and karaoke venues.

The government will evaluate next week if it can release the remaining areas before the declaration ends on May 31, which could help Japan re-activate more of its virus-battered economy.

“Please don’t let your guard down against the virus,” Abe said, adding he wants to make sure that Japan doesn’t see a fresh wave of infections.

More than 16,000 people have been confirmed as infected in Japan, with almost 700 dead -- far lower figures than the U.S. and parts of Europe. Tokyo, which has seen by far the worst toll, saw 30 new infections Thursday, NHK reported.

The immediate focus of policy makers has been to keep companies afloat and workers employed while containing the virus. But concerns are building that the likelihood of the worst economic contraction since World War II in the current quarter -- combined with rock-bottom oil prices -- could push Japan back into the deflation hole it has spent years trying to escape.

Japan’s government and central bank are united in their determination to stop the country sliding back into a negative cycle of falling prices and stagnation, Economy Minister Yasutoshi Nishimura said in an interview.

The economic numbers have been gloomy. Japanese households cut monthly spending by the most in five years in March, as the virus spread and Japan’s biggest automaker, Toyota Motor Corp., warned this week that profit will fall 80% to a 9-year low as consumers hold off on major purchases.

The emergency was first declared April 6 for some prefectures and later extended nationwide. The state of emergency allows local governments to direct businesses to close and to urge residents to stay in their homes, though there are no penalties for failure to comply.

Many regional governors have been urging the government to lift restrictions after seeing severe economic impact, while the number of new infections has fallen close to zero.

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