Has Japan Mishandled the Coronavirus Pandemic? Let’s Look at the Facts

 

 

Those who have spent too much time with the Japanese print and broadcast media, which echoes (and is echoed by) many Western media, are forgiven for thinking Japan has mishandled the coronavirus pandemic. Nearly every article repeats a viewpoint that Japan has mismanaged its experience with COVID-19 from the Diamond Princess saga (which was quite a success) up to today. 

 

But how are they reaching that assessment? 

 

An objective analysis of the hard data confirms the exact opposite is true. Japan is managing the most critical aspects of the pandemic exceptionally well.

 

 

Media Focus Misses the Point

 

Since early February, data on the most critical factors affecting the current status of the COVID-19 epidemic have been widely available. In Japan, much of the focus has been exclusively on Japan. It is worthwhile, however, to compare Japan’s performance to that of other countries hit by the pandemic for a more balanced perspective. 

 

A primary concern is that the media in Japan and globally are overly focused on the number of new daily positive cases, when that metric is the least critical. New case data is simple to report and mesmerizes, as the emotions of the audience swing back and forth with every increase in new cases.

 

Mass media are also designating some countries as “successful” in managing the pandemic and some “failing.” But they never really explain the objective metrics they are using to measure “success” or “failure.”

 

 

What Constitutes Success

 

One empirical approach to determining success in managing the pandemic is to measure two basic criteria, and go from there: 

 

  1. Were the number of deaths per capita minimized to the greatest extent possible? 

 

  1. How well did it fare in quickly restoring its economy to the pre-pandemic level to protect the livelihoods and quality of life? 

 

While simplistic, this approach zeros in on the criteria that matter most and can be measured objectively.

 

So let’s see how Japan is doing nearly eight months since the outbreak began.

 

The following chart shows each country that has reported a minimum of 1000 deaths, ranked by the number of fatalities, adjusted for population. 

 

Above: Deaths and death rates from COVID-19, highlighting G7 countries

 

Using the per capita ranking highlights the human impact of these fatalities on a country, rather than simply provide shock value by highlighting the most populous countries. For example, 500 deaths in a community of 5,000 people are more devastating than 500 deaths in a community of 500,000. As of August 29, Japan ranks 45th out of the 46 countries listed.

 

 

Japan Has Minimized Deaths

 

Japan experienced this virus earlier than the vast majority of countries, beginning late January 2020. Yet, it has achieved a remarkably low number of deaths, both in real terms (1,229 as of Aug. 27) and on a population-adjusted basis (1 death per 100,000 people). 

 

In another key metric, “CFR” (confirmed cases divided by number of deaths), Japan is 1.9, the best among all major Western countries. The global average death rate, on the other hand, is 4.7%, and the G7 average excluding Japan is 8.5. NO major western democracy has done better. 

 

In terms of minimizing the number of deaths, Japan has managed this pandemic exceptionally well. The nearest G7 member, Germany, has had over eleven times the number of deaths on a per capita basis as compared to Japan.

 

Likewise, the occupancy rate of the infectious wards of Japan’s hospitals is low, only 23%;

 

The number of critical care patients who must have access to the limited ventilators and ECMO machines is also low.  Japan has a relatively modest 230 patients in critical care.

 

 

Coronavirus Age Groups

 

Among the current number of active COVID-19 cases by age grouping in Japan, over 82% are patients in the 50s-year-old age group and younger. 

 

Over 95% of all Japan’s deaths to date are in the 60s age group and older, with the 80s and older group being the largest group. The vast majority are reported to have had pre-existing medical conditions. 

 

In part this is a consequence of Japan’s financial support of medical institutions and vaccine development. Japan is next focused on support in this sector to quickly and efficiently dispense vaccines to vulnerable populations when they become available to protect lives. 

 

Ongoing financial support businesses so they remain in operation and retain jobs is also a significant factor. Japan has approved the largest amount of financial support to businesses and medical institutions as a percentage of GDP of any other western country. Over 40%.

 

 

Restoring Japan’s Economy to Pre-Pandemic Level

 

The second measure of success or failure in handling COVID-19 is a country’s ability to revive the economy to pre-pandemic levels as soon as possible. Three economic metrics are used in this comparison: GDP growth, business closures, and job losses. Japan’s performance is being compared to that of its major peers.  

 

Regarding GDP, Japan announced a decline of 7.8% in Q2 over Q1. It sounded horrible, and a rush commenced to declare the permanent end of all gains from eight years of “Abenomics”. Some went so far as to suggest a total “collapse” of the Japanese economy. 

 

But is a 7.8% decline the “disaster” some proclaimed? Well, perhaps, not. Many economists also said that the Japanese economy “hit bottom” in Q2 and has started to climb back. 

 

 

Comparing GDP and Business Suspensions 

 

Germany just announced its Q2 GDP dropped 9.7% compared to Q1. The U.S. experienced a 9.5% Q2 drop. Other major economies (excluding China) declined by double-digits in Q2, including Canada with a negative 12%, Italy with a negative 12.4%, France with a negative 14%, and the U.K. by minus 20.4%. The entire Eurozone Q2 GDP declined by 12.1%. 

 

 

 

So far, it appears that Japan is outperforming its counterparts.

 

Regarding business closures: Only 10% of small and medium businesses in Japan were forced to suspend or close operations in period at the height of the COVID-19 pandemic, versus a global average of 26%. 

 

With most jobs in Japan tied to small and medium companies, their ability to stay afloat also means Japan will see fewer job losses. In comparison, over 41% of small and medium businesses in the U.K. have closed or suspended their operations. In Ireland over 50% have closed or suspended operations. 

 

 

Economics and Employment

 

Experiencing the COVID-19 pandemic in the midst of a strong global economy leads to real concern about job losses. On this front too, though, Japan fares better than most of its peers. Here is the unemployment data for some of Japan’s major peers. 

 

A review of the latest available total number of unemployed and the unemployment rates (this is the percentage of the working population adjusted for those actively seeking employment) for Japan, G7 and other major peers is revealing.

 

In the U.S., 16 million are unemployed (unemployment rate: 10.2%). In Canada, there are  1.3 million unemployed (10.9%), in France there are 3.8 million (7.1%), the U.K. 1.3 million (3.9%), Italy 760, 000 (8.8%), Germany 2.9 million (6.4%). In the greater Asia region, Australia has 1 million unemployed (7.4%). South Korea 1.2 million (4.2%), India 38 million (11%) and Japan 1.7 million (2.6%). 

 

It is also important to note that the unemployment numbers in some countries are being cushioned by temporary financial subsidies. As a result, the unemployment numbers may increase significantly once that support is ended. For example, economists in the U.K. are predicting the British unemployment rate will double once that support ends. 

 

And finally, there is the issue of whether the job losses are temporary or “permanent” in nature. Some economists in the U.S. are concerned that over 40% of American job losses will be permanent, leading to longer-term negative economic impacts. As Japan has more job openings than candidates, a situation that continues even now, it is unlikely that any job losses in Japan will be permanent.

 

 

Looking Forward

 

On every objective measure, Japan is handling this pandemic as well or better than its major peers.

 

Among Japan’s counterparts in Europe and the Americas, Japan has the lowest number of actual deaths as well as the lowest number of deaths on a per capita basis. Its GDP performance in Q2, while a serious concern, is far better than that of its European and American peers. With the fewest number of business closures and suspensionsーon par with Germany and South Koreaーand the lowest impact on unemployment and job losses, there is also evidence that its economy is beginning to rebuild. 

 

Taken together, is there any major country that would not trade positions with Japan in a heartbeat?

 

 

 Author: Edo Naito             

 

Edo Naito

Author:

Edo Naito is a retired international business attorney. He has held senior executive positions, leading major business units in Japan, the Indo-Pacific region, and globally at several U.S. and Japanese multinational companies. He naturalized as Japanese in 2015 after living and working in Japan for over 40 years.

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