Large government subsidies kept workers in their jobs and companies in business. To stimulate the service sector, authorities provided discounts for those willing to travel and eat out. Diners returned to restaurants and shoppers returned to malls. By October, moviegoers were flocking to the theaters.
Abroad, pent-up demand from Japan’s major trading partners, especially China — where the virus has been nearly eradicated — drove a recovery in exports. Chinese consumers rushed to buy new cars and factories resumed purchases of electronic components, helping Japanese companies to recover from devastating losses earlier in the year.
Japan’s success in controlling the virus so far — it has recorded around 1,800 deaths since the pandemic began — has made businesses and investors bullish. Economic sentiment in the service sector is at its highest point in six years, according to a monthly government survey. And the country’s main stock exchange, the Nikkei, hit a 29-year high last week.
But it may be difficult to maintain the recovery’s momentum as the virus spreads in the winter months. Although daily case counts in Japan have yet to pass the 2,000 mark, the numbers have grown steadily in recent weeks.
As case counts grow, government efforts to stimulate the economy through discounts on travel and dining out have come under fire, with many questioning the wisdom of encouraging people to move around during the pandemic.
While the government has said it will exercise increased vigilance, Prime Minister Yoshihide Suga has continued to support the program, saying that there is, as of now, no need to consider a new state of emergency.
But “things could change a lot depending on what happens with the coronavirus,” said Yoshiki Shinke, chief economist at the Dai-ichi Life Research Institute. The recovery would most likely stall if the government calls for new restrictions on activities as it seeks to curb new cases, he said, adding “as of right now, all you can say is that there is a lot of uncertainty.”