Japan plans to plow $1 trillion into its economy to combat a coronavirus downturn

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Japan plans to plow $1 trillion into its economy to combat a coronavirus downturn

shinzo abe

Kent Nishimura/Getty Images

Japan is set to announce a $1 trillion stimulus and declare a state of emergency.

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  • Japan will provide $1 trillion in aid relief to mitigate the economic fallout from the novel coronavirus.
  • The Japanese government will declare a "state of emergency" in seven prefectures, but public transportation and other businesses will continue to operate.
  • The stimulus package, equivalent to 20% of national GDP, is meant to help families and businesses suffering from the pandemic.
  • Visit Business Insider's homepage for more stories.

Japan, the world's third-largest economy, will commit 108 trillion yen ($988 billion) to provide security and protect the jobs of people affected by the economic fallout from the coronavirus pandemic.

Prime Minister Shinzo Abe said in a press briefing on Monday that he will declare a state of emergency lasting for about one month. There are now 3,906 confirmed cases of coronavirus and 92 deaths across Japan.

The Japanese government will provide more than $55 billion in cash payments to families and small and medium-sized businesses affected by the outbreak. Abe also plans to protect employment by supporting $240 billion in interest-free loans, and offering a grace period for payment of national taxes to help ailing businesses.

After getting a green light from the chair of the advisory committee on COVID-19 countermeasures, Abe decided to announce a state of emergency on Tuesday for Tokyo, Osaka, and five other prefectures - or districts - where the number of coronavirus cases are rising rapidly.

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Last month, Japan appeared to have the novel coronavirus epidemic well-contained but by March 24, when the 2020 Olympics in Tokyo were called off, the virus was spreading fast.

The country's "state of emergency" seems unique in comparison to what the rest of the world is witnessing. While national lockdowns have been imposed across the US, UK, Italy, Spain, France, Germany, and other severely affected countries, Japan will run as usual while maintaining social distancing measures.

"In Japan, even if we issue the declaration of a state of emergency, we will not enforce the lockdowns of cities as seen abroad," Abe said. "Public transportation, such as trains, will continue to run and supermarkets and other businesses will remain open."

Abe said the general public would have to continue to prevent the spread of infections by avoiding the "3Cs" (closed spaces, crowded places, and close-contact setting), among other measures. The emergency declaration seeks to add reinforcement to government measures.

The Nikkei, Japan's benchmark stock index, gained 2.0% on Tuesday to close at 18,950, its strongest finish since March 31.

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Governments and central banks around the world have released unprecedented monetary and fiscal support for economies knocked down by the pandemic.

The G20 said it would inject more than $5 trillion into the global economy to stem job and income losses, the US passed a $2.2 trillion aid package, Italy's emergency decree is worth 25 billion euros, Spain set out a package of 200 billion euros and the UK has a £30 billion stimulus plan, according to a Reuters report.

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