What can we learn from South Korea? What is the situation in Japan?

LAGOS (Capital Markets in Africa) – South Korea’s efforts to combat coronavirus yielded impressive results. The number of coronavirus patients there stands at 8,961 as of March 23.12 But after a dramatic increase was observed through the first week of March, driven by a surge among participants in a large religious gathering in Daegu, the number of daily new patients has dropped to only approximately 100 over the past week. The slower pace of spread is due to the Korean government’s aggressive measures, including testing as many potential patients as possible (including via drive-through testing), providing testing and treatment free of charge, and closing schools. While there still is a risk of an explosive increase, the situation is stabilizing.

In Japan, the government was widely criticized for how it handled a large cruise ship case early in the outbreak, which resulted in 719 coronavirus infections. But apart from this case, the number of patients remains relatively limited at 1,069 as of March 22.14 In fact, the Japanese government took bold actions from an early stage. On Feb. 26, Prime Minister Shinzo Abe publicly asked organizers of national-level major events (such as sports and cultural events) to cancel, postpone, or downsize those events. He also asked all primary, secondary, and high schools to terminate classes from March 2 until the end of this school year (which normally runs to the end of March). An explosive increase in patients cannot be ruled out in the near term as Japan continues to have daily new cases with untraceable sources. In addition, strong measures such as lockdown have not been implemented. But for now, Japan is not in a crisis situation on an epidemiological front.

On an economic front, Japan’s consumption has been deteriorating since the majority of the population has generally refrained from going out for dining and non-essential activities. Responding to the prospect that negative GDP growth is very likely for the second and third quarters, the Abe administration announced that it would reveal a significant fiscal package in April, which would add fiscal firepower to the existing fiscal easing measures incorporated in the FY2019 supplemental budget and FY2020 general budget.15

Source: Invesco Global Market Strategist