The Bank of Korea: "Growing Concerns Over COVID-19 Resurgence in Japan... Possible Delay in Economic Recovery"

[Asia Economy Reporter Eunbyeol Kim] There is an analysis that the recovery of the economy in Japan may be delayed as the possibility of a resurgence of confirmed cases of the novel coronavirus infection (COVID-19) is increasing.

On the 12th, the Bank of Korea stated in the 'Overseas Economic Focus' that "The Japanese economy is showing a slow recovery even after the emergency declaration was lifted, and if COVID-19 resurges, the economic recovery in the second half of the year may be further delayed."

Since the emergency declaration was lifted on May 25, the number of confirmed cases has surged mainly in Tokyo. The number of new confirmed cases, which had dropped to 20 at the time of lifting, sharply increased to 60 on the 15th of last month and 208 on the 7th of this month.

Last month, Japan's Tankan business conditions index recorded its lowest level (-31) since the global financial crisis, while industrial production (-8.4%) and exports (-5.8%) in May continued to decline compared to the previous month.

However, after the emergency declaration was lifted, with the expansion of domestic travel and easing of event restrictions, the service sector Purchasing Managers' Index (PMI) in June showed some improvement. The service sector PMI rose from 26.5 in May to 45.0 in June.

The Japan Center for Economic Research forecasted that if the spread of COVID-19 continues, the economic growth rate this year will record -8.5%.