Japan Worried About The Economic Impact Of Corona Virus

Illustration. (Photo: Unsplash)

JAKARTA - The corona virus outbreak in China also gives concern to Japan. The country of origin of the cherry blossom stated this through the Japanese Economy Minister Yasutoshi Nishimura who warned that the outbreak would have an impact on decreasing profits for companies and factory products in Japan.

"There are concerns about the impact on the global economy from the spread of infection in China, transportation disruptions, cancellation of group tours from China during the extended period of the Lunar New Year holiday," Nishimura said, quoted by Reuters, Tuesday, January 28.

If the situation takes longer to subside, he continued, he is concerned that it could hurt Japanese exports, output and corporate profits through the impact on Chinese consumption and production.

China is Japan's second largest export destination. Apart from car manufacturers, retailers have also become highly dependent on the country amid Japan's slow economic growth and shrinking demographic conditions.

The outbreak could hit department store, retail and hotel businesses in Japan, which rely on increased sales from visiting Chinese tourists during the lunar holiday season.

For example, the Honda Motor company has three factories in Wuhan, the capital of Hubei province and a deployment center, so Japan plans to evacuate some employees. In addition, Fast Retailing, which operates the Uniqlo clothing supply chain, has for the moment chosen to temporarily close around 100 stores around Hubei.

However, retail company Aeon is keeping five supermarkets in Wuhan operating as requested by the local government even though several other mall shops are closed.

A survey stated that Chinese made up 30 percent of all tourists visiting Japan and nearly 40 percent of the total amount spent by foreign tourists last year.

"We are worried that sales and the number of buyers could fall if the outbreak continues," said a public relations official at Isetan Mitsukoshi Holdings, which is the main operator of Japanese department stores.

“It's not just about Chinese tourists. We are also worried that the outbreak will discourage Japanese buyers from leaving their homes, ”he added.

Economists at SMBC Nikko Securities estimate that if the ban on Chinese tours to overseas takes another six months, it could hurt Japan's economic growth by 0.05 percent.

Some parties even predict that the economic impact could be worse. Hideo Kumano, chief economist at the Dai-ichi Life Research Institute, said the decline in tourists from China could hurt Japan's GDP growth by up to 0.2 percent.

"The biggest concern is the risk of a negative impact from the outbreak continuing and hitting (the economy) during the Tokyo Olympics," he said.

When a large number of Chinese tourists are expected to visit Japan at the 2020 Olympics in July and August. "If the number of visitors decreases rather than increases, the impact on the Japanese consumption industry will be quite large," he concluded.