Japan’s vaccine drive may spur economic boost from ‘forced savings’ -BOJ – The Foreigners magazine In tokyo
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Japan’s vaccine drive may spur economic boost from ‘forced savings’ -BOJ

Written by on May 6, 2021

The Bank of Japan expects the national COVID-19 vaccination programme to spur an economic boost from households venturing out, armed with $183 billion in “forced savings” accumulated last year during pandemic-busting, stay-at-home policies.

The government is set to decide this week whether to extend a state of emergency in major areas to combat a resurgence in novel coronavirus infection, reinforcing broad expectations that any economic recovery will be slow and fragile.

Still, consumption may rebound relatively quickly once vaccines have been distributed widely, as households tap 20 trillion yen ($183 billion) in money they were “forced” to save when measures adopted to stop the spread of the coronavirus, such as early store closing, deprived them of opportunities to spend, showed a Bank of Japan estimate released last week.

The amount is roughly 7% of Japan’s disposable income with over half likely held by middle- and high-income households, which spend large amounts on services, the central bank said.

“Until effective vaccines become widespread, the spread of COVID-19 may push down private consumption through public health measures and households’ self-restraint behaviour,” it said.

But forced saving may come to a sudden end as vaccinations become widespread, the BOJ said.


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