TOKYO - The coronavirus pandemic has raised the chance Japan’s economy will slip back into deflation as social curbs to halt the spread of the disease hits businesses and consumers, a majority of analysts polled by Reuters said.
“Even after the pandemic is contained, Japan’s output gap will unlikely return to positive territory this year and next,” said Hiroshi Ugai, chief economist at JPMorgan Securities Japan.When asked whether the pandemic could tip Japan back into deflation, 23 of 40 analysts polled said the chances were either “high” or “very high.” The remainder said the likelihood was low.
The government issued a state of emergency in April requesting citizens to stay home and businesses to shut.