Japanese economy reels from coronavirus outbreak

The Wuhan coronavirus is spreading around the world and increasingly appears to be an international health crisis of the highest order. As doctors and disease specialists work on measures to contain the virus, the Japanese economy is experiencing widespread consequences.

Death toll in China exceeds that of 2003 SARS outbreak

Chinese health authorities announced on Monday that the number of confirmed cases on the mainland had reached 17,205, up nearly three thousand from the previous day. The death toll currently stands at 361, exceeding that of the 2003 SARS outbreak, which killed 349.

To cope with the increasing number of cases, the government built a hospital in the city of Wuhan, the epicenter of the outbreak. The rapid construction has drawn widespread media coverage and has been presented by the government as evidence of how seriously it is taking the mounting crisis. But the opening of a single hospital does little to resolve the shortage of medical facilities and doctors in the affected region. Reports from Wuhan paint a dire picture: hospital waiting rooms packed with patients, with additional sick people blocked from entering.

China built a hospital in Wuhan, the epicenter of the outbreak, in just ten days.

Global crisis

In the weeks since it was identified as the cause of a mysterious pneumonia outbreak in Wuhan, the coronavirus has spread quickly. Outside China, there have been nearly 200 confirmed cases in 26 regions and countries as of Monday.

The first death outside of mainland China was announced on Sunday in the Philippines. The country's health authorities said the victim was a 44-year-old man from Wuhan believed to have entered the country via Hong Kong on January 21st.

Economic impact

Japan has confirmed 20 cases of the virus and while the country has so far been spared from a large-scale outbreak, the rising global concern has dealt a serious blow to the country's economy.

Japan's tourism industry is particularly reliant on China. Last year, Chinese tourists accounted for nearly 30 percent of all overseas visitors to Japan, and their spending accounted for a staggering 35 percent of total consumption by tourists.

Isetan Mitsukoshi Holdings, operator of the popular Isetan department chain, says purchases by foreign visitors have taken a severe hit. This comes as the company's outlets in the Tokyo area, including its flagship store in Ginza, have all seen a steep decline in shoppers from China. Isetan says it has been forced to adjust its net profit forecast for the current fiscal year, slashing it in half to 7 billion yen, or roughly 60 million dollars.

The airline industry has also experienced a devastating downturn. Japan Airlines says in the ten days following January 20th, the first day the virus was confirmed outside of Wuhan, 25 percent of reservations for China-bound flights were cancelled. The company says it is considering reducing or even suspending flights to the country entirely, depending on how the situation develops.

Meanwhile, rival carrier All Nippon Airways says reservations on its China-bound flights for February have dropped by 40 percent from the same period last year. For routes in the opposite direction, this figure rises to 50 percent.

The epidemic is also hitting the auto industry, as Japanese firms with plants in China have struggled to continue operating amid the government's announcement that it is extending the Lunar New Year Holiday.

Toyota had been planning to reopen its factories in early February but has been forced to keep four of them closed until the 10th or later. Honda is also extending the holiday break for its factory in Wuhan until the 13th. It is suspending operations at other plants in the country until the 9th. Mazda and Mitsubishi are adopting similar measures.

Honda is keeping its plant in Wuhan closed until at least February 13th.

Companies in Japan prepare

Meanwhile back in Japan, many companies are taking preventative measures against the spread of the virus. Some have told employees who recently traveled to China that they can work from home.

E-commerce giant Rakuten has postponed all business travel to China for the time being. It has also told workers who were in the country on business or leisure after January 16th to work from home for two weeks. Japan's largest brokerage firm, Nomura Holdings, is urging employees who traveled to China after January 15th to do the same.

Human resource company Pasona Group is allowing its staff to alter hours so they don't have to commute during rush hour. The firm says it will also use a video conference system, so employees can remain productive away from the office.

China has the world's second largest economy and is inextricably linked with almost every country in the world. If the coronavirus outbreak continues for months, as some experts say is possible, this could lead to an extended downturn with devastating effects on economies everywhere. While most of the world will be safe from the virus itself, its consequences are likely to be felt in every corner of the globe.