TOKYO (Reuters) – Japan will look into additional steps to cushion the economic blow from the coronavirus pandemic, its economy minister said on Friday, signalling that more stimulus measures could be forthcoming as the country sinks into deep recession.
Japan compiled a record $1.1 trillion economic stimulus package in April that focused on cash payouts to households and loans to small businesses hurt by the pandemic.
Ruling coalition lawmakers are ramping up calls for more assistance, as the government’s decision on Monday to extend a state of emergency through May heightens the chance of more bankruptcies and job losses.
Prime Minister Shinzo Abe said on Monday the government will look into ways to offer rent relief for businesses and help university students who lost part-time jobs pay tuition.
“We’re moving quickly to scrutinise what further steps are necessary, in consultation with the prime minister and close coordination with the ruling coalition,” Economy Minister Yasutoshi Nishimura told a news conference.
The ruling Liberal Democratic Party will present a proposal to Abe including a plan for the government to cover two-thirds of the rent for small businesses hit by the pandemic for up to six months, the Nikkei newspaper said.
The sticking point will be on how to pay for the plan. Some lawmakers are demanding the government compile a second supplementary budget, following one that was put together to partly fund the $1.1 trillion package.
Finance Minister Taro Aso, however, said any additional spending should first be covered by 1.5 trillion yen ($14 billion) worth of reserves set aside under the first supplementary budget.
“We don’t know yet how big any new spending package would be,” Aso told a briefing on Friday. “We’re not at a stage to say when and how much” the government will need to spend, he added.
The economy likely shrank for a second straight quarter in the first three months of this year, a Reuters poll showed, meeting the technical definition of a recession as the pandemic crushed consumption and business activity.
Gross domestic product (GDP) data on May 18 is likely to show the world’s third-largest economy contracted an annualised 4.6% in January-March, the poll of 14 analysts showed on Friday. Many believe the slump will be even deeper in the current quarter.
Japan has reported over 16,000 coronavirus cases and 603 deaths.
(Reporting by Kaori Kaneko and Tetsushi Kajimoto; Writing by Leika Kihara; Editing by Shri Navaratnam and Kim Coghill)