Weekly Brief: Japan’s COVID Restrictions and the Economic Impacts

Main Regulations

Source: eastasiaforum.org

Since the beginning of the pandemic, Japan has implemented one of the strictest and most limiting restrictions in the world, which stands out among the G7 countries. There are 2 main policies that have been upheld: Border restrictions (水際対策) and quasi-state of emergency policies (まん延防止重点措置).

Border Restrictions

Since 2020, Japan has severely limited foreign travelers from entering the country as a means of preventing a rapid spread of COVID-19. For most of the past 2 years, only Japanese citizens, foreigners with re-entry visas, and those with special circumstances were allowed to enter, leaving airports and tourist spots mostly empty. As criticism mounted from the media, economists, and politicians, the Japanese government announced a gradual relaxation of border restrictions that began on March 1st, 2022. Though the framework of the restriction still differs from pre-COVID times, students and business travelers will be able to obtain a visa and enter Japan.

Overseas Residents’ Visits to Japan by Year

Economic Gains from Reopening

As a result of this relaxation in border controls, the Nomura Research Institute (NRI) estimates that approximately 1.6 trillion yen ($14 billion) will be added to the economy. This translates to 0.3% of Japan’s GDP. Not only will universities, language schools, and companies benefit, but also other industries including retail, food, and hotel, as general spending will increase.

Tourism Industry

One group left out of the updated policy is tourists. As such, the tourism industry in Japan continues to suffer from tight restrictions. In 2020, foreign tourism declined by around 90% compared to 2019. This halted the growth of Japan’s booming tourism industry, which was previously worth around 4 trillion yen ($34 billion).

Quasi-State of Emergency

Domestically, Japan introduced policies under the quasi-state of emergency to curb infections within the country. These are generally applied to prefectures with particularly high numbers of COVID cases.

The policies put a focus on restricting activity in public spaces, including restaurants. For example, restaurants are ordered to close early and not serve alcohol after a certain hour. Many restaurants and izakayas were negatively affected, with some closing down permanently; at the very least, they had to change their sales techniques and business strategy.

Huge Losses for the Economy

Though some experts point out that Japan may have passed the peak of the Omicron variant infections, the numbers of cases are still high. With an extension of the policies in 18 prefectures until March 21st, the resulting economic loss is estimated to be an additional 900 billion yen. Coupled with losses from the previous quasi-state of emergencies, the loss will amount to more than 4 trillion yen.

In this context, Keidanren (経団連), Japan’s top business lobby, has proposed that COVID should be declared an endemic rather than a pandemic, and has been encouraging a faster and wider opening of Japan’s border and economy.

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References

Neo, P. (2022, March 8). 'in a bind': Japan alcohol sector voices concerns for industry growth after being battered by new round of covid-19 restrictions. foodnavigator. Retrieved March 10, 2022, from https://www.foodnavigator-asia.com/Article/2022/03/08/japan-alcohol-sector-concerned-for-industry-growth-amid-new-covid-19-restrictions

Writer, S. (2022, March 7). Japan should lift entry cap, declare covid-19 endemic: Keidanren. Nikkei Asia. Retrieved March 10, 2022, from https://asia.nikkei.com/Spotlight/Coronavirus/Japan-should-lift-entry-cap-declare-COVID-19-endemic-Keidanren

Yamaguchi, M. (2022, March 1). Japan relaxes COVID-19 border controls, but only slightly. The Diplomat. Retrieved March 10, 2022, from https://thediplomat.com/2022/03/japan-relaxes-covid-19-border-controls-but-only-slightly/

日本放送協会. (2021, April 1). まん防＝「まん延防止等重点措置」って何をするの？: NHK. NHK首都圏ナビ. Retrieved March 10, 2022, from https://www.nhk.or.jp/shutoken/newsup/20210401c.html

木内 登英. (2022, February 15). 水際対策緩和の経済効果は年換算で1.6兆円と試算. Nomura Research Institute (NRI). Retrieved March 10, 2022, from https://www.nri.com/jp/knowledge/blog/lst/2022/fis/kiuchi/0215

木内登英. (2022, March 3). まん延防止措置延長で経済損失は合計4.0兆円。ウクライナ情勢による原油高の影響と政府の各種政策の評価 t. Nomura Research Institute (NRI). Retrieved March 10, 2022, from https://www.nri.com/jp/knowledge/blog/lst/2022/fis/kiuchi/0303_3