Economic losses expected to swell after latest extension

Experts have expressed concern about the prospects of consumer spending due to the impact on the domestic economy of another state of emergency extension.

Keiji Kanda, a senior economist at Daiwa Institute of Research Ltd., estimated that the latest extension from June 1 to June 20 will push down real gross domestic product by about ¥700 billion and have a significant impact on sectors such as food services, lodgings, railroads, and aviation.

Kanda predicts that the overall impact of the third state of emergency, which was declared in April, will push down real gross domestic product by ¥1.6 trillion.

The average real GDP growth rate for the April-June period projected by 10 major private research organizations in May was a 0.3% increase on an annualized basis compared to the previous quarter. However, downward pressure will inevitably intensify, and it is widely believed that negative growth for the second consecutive quarter following the January-March period is inevitable.

Shinichiro Kobayashi, chief researcher at Mitsubishi UFJ Research and Consulting Co., had predicted positive growth for the April-June period on the assumption that the emergency would end at the end of May. “The extension has increased the possibility of negative growth due to the continued decline in personal services. There is a risk that more businesses will close, such as restaurants, and there are concerns that employment will worsen,” he said.