Prime Minister Shinzo Abe declared a state of emergency in an effort to contain the spread of the coronavirus in Japan and his cabinet approved a record stimulus package.
Fiscal measures will see more than $50 billion in cash transfers for households and small to midsize enterprises affected by the pandemic.
In a televised appearance, the prime minister said the state of emergency would remain in place for one month and cover seven of Japan's most populous prefectures: Tokyo, Osaka, Chiba, Kanagawa, Saitama, Hyogo and Fukuoka.
Mr. Abe said the stimulus package – with an initial phase focused on limiting the economic fallout from efforts to contain the virus and a subsequent phase tailored to strengthen an eventual recovery – would amount to a record ¥108 trillion ($994.8 billion), or roughly 20% of the Japanese economy's output.
Still, the prime minister said there will be no compulsory lockdown in the country, with success in containing the virus reliant instead on citizens heeding the call for social distancing and taking appropriate precautions.
The state of emergency and hefty stimulus package come at a moment when the number of cases of COVID-19 infections in the country – although doubling over the past week – stands at around 4,000.
John Vail, Tokyo-based managing director and chief global strategist at Nikko Asset Management, said in a note on the package that Japan is wise to target a large portion of the initial stimulus for individuals, families and small and midsize businesses, while focusing subsequent subsidies on boosting demand for hard-hit sectors like tourism and restaurants once the virus subsides.
