Azuma Toru, Professor, Rikkyo University The effect of the COVID-19 pandemic Tourism has been dealt a serious blow by the COVID-19 pandemic. Not only has inbound tourism suddenly decreased since COVID-19 infections started growing last February, travel overseas has shrunk because travelers have nowhere to go. What’s more, even within Japan travel demand for tourism, business travel, and vacation trips to hometowns has greatly decreased. It’s a situation of “lost inbound” in which inbound tourism since last April continues to be down more than 99% month-on-month vs. the previous year. Bearing in mind that the amount spent by inbound travelers in 2019 was 4.8 trillion yen, that has mostly gone and the economic loss is extremely large. In particular, areas with a high ratio of expenditure by inbound tourists, such as Osaka (46.2%) and Tokyo at (44.8%) have been very greatly affected compared to ... ... [Read more]

Yoshikawa Hiroshi, President, Rissho University The Current COVID-19 Pandemic The current state of the Japanese economy is at a postwar low point not just in Japan but across the world due to the spread of COVID-19 since early 2020, and this is our biggest problem at present. On top of the normal influenza in winter, the spread of a third wave is feared in Japan. What will happen to the Japanese economy amid that? The second quarter of April through June, 2020 showed -28.1 points (second preliminary estimate), the lowest in the postwar period. This was a dramatic drop even in comparison to the Lehman Shock. A major factor here is the drop in consumption. About 60% of Japan’s GDP of some 500 trillion yen is consumption. At the very heart of the economy lies household and personal consumption. Consumption is stable compared to ... ... [Read more]

Iwaisako Tokuo, Professor, Hitotsubashi University   Key points Both household savings and current account balances are gradually moving into the red The rates of return on assets are not expected to rise after the COVID-19 pandemic Economic policy focuses on measures to improve the productivity of workers   From a macroeconomic perspective, there has been surprisingly little change in the circumstances surrounding Japanese household financial assets in the past quarter-century. To start with, household savings rates dropped sharply at the beginning of twenty-first century. This prompted an outcry among economists about the arrival of the “zero-saving society”, backed by the simulation studies predicting negative household savings and the current account deficit (= negative national savings). But by the mid-2000s, saving rates had stabilized at a low level and the situation has remained nearly unchanged since then.  In economics, annual savings is a flow variable, ... ... [Read more]

Fujimoto Takahiro, Professor, Graduate School of Economics and Manufacturing Management Research Center, University of Tokyo   Key points Issues include sustainability, digitalization and internationalization The discourse around the decline in the Japanese manufacturing industry and the praise for EVs is superficial The challenges are intertwined in complicated ways and Japanese industry is evolving   What kind of age will the 2020s be in the evolution of industry? The decade began with the global COVID-19 pandemic, the effects of which are certain to be prolonged, but the long-term industrial phenomena include measures to counter global warming, a series of floods and earthquakes, digitalization, US-China friction, and a shrinking real economy at a time of infections. To complicate matters, these issues are interlinked in complex ways. We live in complicated times in the true sense. These issues can be summed up as S for sustainability=crisis, D ... ... [Read more]

Nakagawa Junji, Professor, Chuo Gakuin University Key points Biden administration expected to return to the TPP Add labor and environment-related rules to the RCEP Lobby the United States which holds the key to improving WTO functions From the end of 2020 to the beginning of 2021, a series of developments had a major impact on Japan’s international trade policy. The Trump administration, which advocated the America First principle, came to an end and the Biden administration began. In this context, it is highly likely that the international trade policy adopted under the Trump administration will be reviewed. In November 2020, the Regional Comprehensive Economic Partnership (RCEP) was agreed without the involvement of India. Once the RCEP comes into effect, a free trade zone of fifteen countries, including the Association of South-East Asian Nations (ASEAN) and China, will be created. At the start of the ... ... [Read more]

Urata Shujiro, Professor Emeritus, Waseda University The RCEP Has Finally Been Signed On November 15, 2020, fifteen East Asian countries including Japan, China, South Korea, the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand signed the Regional Comprehensive Economic Partnership (RCEP). The RCEP negotiations were launched in May 2013 by sixteen countries, the fifteen mentioned above and India, but the negotiations ran into problems. The deadline for signing the agreement was updated many times and India even withdrew from the negotiations, but after seven years, a signed agreement has now finally been achieved. The RCEP is a comprehensive agreement consisting of trade and investment liberalization as well as rules for intellectual property and electronic commerce. Since many countries, including the principal ones, are among the member nations, the RCEP is also referred to as a mega free trade agreement (FTA).     ... ... [Read more]

Kawashima Shin, Professor, Graduate School of Arts and Sciences, University of Tokyo The Problem of Infectious Disease at a Turning Point in the World Order COVID-19, which spread from Wuhan in China, has once again reminded us that human society has long been confronted with infectious disease. Even in modern times, infectious disease remains a challenge to be overcome. Nations and the international community have dealt with the challenge, but by the latter half of the twentieth century, such “memories” may have gradually faded in many developed countries. However, since the start of globalization in the 1990s, emerging nations, which are already dealing with in-country sanitation vulnerabilities, have had outbreaks of unknown disease that have quickly spread outside the country. COVID-19 has raised significant issues for human society. Firstly, international cooperation functioned in case of the Ebola hemorrhagic fever (EHF) and other diseases, but ... ... [Read more]

The truth and fiction about the Japan model summed up by the COVID-19 Independent Investigation Commission: Why was Japan able to keep COVID-19 deaths low? ― The reality was a series of provisional responses.   Funabashi Yoichi, Chairman, Asia Pacific Initiative   The pace of the increase in newly reported COVID-19 infections is accelerating in Europe. On the other hand, the number of infections in Japan has been at comparatively low levels, with approximately 1,700 deaths or approximately 13 deaths per million people as of the time of this writing. Considering that COVID-19 deaths in the United States and the United Kingdom are up to 50 times greater, and the deaths even in Germany are nine times greater, the COVID-19-related mortality to population ratio in Japan is clearly low compared to other advanced industrial nations. When he ended the state of emergency, the then-Prime ... ... [Read more]

Kimura Fukunari, Professor, Keio University   Key points Pressing need to restore rules-based international trading order Mega FTAs effective strategy in reducing policy risk Important to utilize and strengthen TPP11 and RCEP   Since the mid-1980s, international production networks have developed in East Asia. This international division of labor in terms of production processes and tasks has created “Factory Asia” in the manufacturing industry, particularly machinery industries. The production blocks responsible for processes and tasks in production networks are located across national borders, necessitating economic conditions and a policy environment that allows for close coordination between production blocks. A rules-based international trading order is therefore essential. However, in the past four years the international trading order has been under assault. The international trading order has faced challenges on many fronts, including the Trump administration’s trade policy that shows a disregard for the rules, countermeasures ... ... [Read more]

Oba Mie, Professor, Kanagawa University   Key points Needs to center around formulation of shared rules for investment, intellectual property Important that China accepts restrictive provisions Needs to have shared rules aimed at sustainable development   In November 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed by 15 countries, comprising the members of the Association of Southeast Asian Nations (ASEAN) as well as Japan, China, South Korea, Australia and New Zealand. This created a huge economic zone that accounts for around 30% of the world’s GDP, trade and population. The start of negotiations by 16 countries, including India, was announced in November 2012. Aligning the complicated interests of each country was not easy, and the deadline for negotiations was postponed many times. After many twists and turns, a negotiated agreement was reached. India ultimately decided not to join. Through the 2010s, the future ... ... [Read more]

Shimoji Yoshiro, Chairman of the Okinawa Convention & Visitors Bureau (OCVB) Interviewed by Yamada Yuichi, General Manager of the Tourism Research Department, Japan Travel Bureau Foundation on October 7, 2020 Developments in Okinawa tourism from spring to September 2020 Yamada Yuichi: Please tell us about developments in Okinawa tourism over the last few months. Shimoji Yoshiro: There was nothing we could do about the national emergency declaration in April and May, but in June and July when we’d finally started to recover, infection spread in an unexpected place, namely nightlife districts. Okinawa has been susceptible to infectious disease due to our social environment. Historically, we have many children and elderly people who often interact, and this was the case during previous epidemics of new strains of influenza or measles. It is a weakness with no solution and we have gone on with 20 or ... ... [Read more]

Morikawa Masayuki, President, Research Institute of Economy, Trade and Industry (RIETI)   With the steep decline of gross domestic product (GDP) under the novel coronavirus (COVID-19) crisis, how much has productivity dropped? The figure below shows month-by-month changes in the overall productivity of the Japanese economy. While production activity in May 2020 was down around 15% compared with the end of 2019, productivity declined only about 3%. Although productivity still remains below the level before the consumption tax rate hike, it recovered to almost the pre-COVID-19 level in August.     Figure. Labor Productivity Under the COVID-19 Crisis   The decline in labor productivity until now has been smaller than might have been expected because labor input, which corresponds to the denominator in the calculation, has dropped steeply in tandem with industrial activity. A breakdown shows that working time adjustments, including reduction of overtime ... ... [Read more]

Oshitani Hitoshi, Professor, Department of Virology, Tohoku University Graduate School of Medicine   Since June, Japan has experienced a COVID-19 “second wave” of considerable magnitude. This was expected to a certain extent, given that people’s movements have not been forcibly restricted as they were in the earlier state of emergency. However, its scale exceeded expectations. Since the peaking of the second wave in late July, the rate of decline has been slower than the first wave in April and May. Eventually, rates of new cases stopped declining and the number of cases began to rise in some prefectures, along with a gradual increase in the number of deaths. The source of the second wave is believed to have been Tokyo, the scale of the outbreak at the source so large that it left an impact across the country. The mechanism by which COVID-19 becomes ... ... [Read more]

Nakao Takehiko, Former President of the Asian Development Bank and Chairman of the Institute at Mizuho Research Institute Ltd.   Nakao Takehiko, whose approximately seven-year tenure as the President of the Asian Development Bank (ADB) ended in January 2020, described his days at the bank in his recently published book, Ajia keizai wa do kawattaka (How has the Asian economy changed?). Chuokoron’s editorial department asked him about the future of the Asian economy and a rising China. The interview was held in July 2020. What will a post-COVID-19 Asia be like? — The COVID-19 pandemic continues. What impact will it have on the Asian economy? With the severity of the pandemic remaining low in Asia, people say that, from a global perspective, its economic recovery will be quick. Nakao Takehiko: I’m not a medical expert, so I do not know how the COVID-19 pandemic ... ... [Read more]