TOKYO (Reuters) – Over 60% of Japanese companies said their earnings were being hurt by the coronavirus outbreak, a survey by a private think tank showed on Wednesday, adding to market fears the epidemic could tip the world’s third-largest economy into recession.
A separate index measuring companies’ sentiment on the economy hit a seven-year low in February, Teikoku Data Bank said, as travel restrictions, event cancellations and supply chain disruptions hit service-sector firms and manufacturers.
“The impact of the virus is spreading to various industries,” the think tank said. “The economy will likely continue to retreat moderately due to many risks including the epidemic.”
Japan has seen a spread in the coronavirus with infections reaching the 1,000 mark on Wednesday, stoking concerns about whether the Tokyo Summer Olympics in July will be held as scheduled.
In a sign of the widening fallout, Japan’s biggest carrier ANA Holdings Inc (T:) and local rival Japan Airlines Co Ltd (T:) said they would cancel some of their domestic flights on March 6-12 due to slower travel demand.
In the survey conducted Feb. 14-29, 63.4% of firms said their earnings were being hurt by the outbreak.
Among those firms, 30.2% said their earnings had already been hit, while 33.2% said they expected earnings to be affected in the near future.
All 10 industries that featured in the survey saw sentiment worsen, including tourism, which took a hit from falling domestic and overseas visitors, the survey showed.
Japan’s economy suffered a contraction in the three months through December and may shrink again in the current quarter due to the health crisis, which has disrupted supply chains and hurt retailers reliant on inbound tourism, analysts said.
Heightening risks of a recession are adding pressure on the Bank of Japan to expand monetary stimulus to prop up growth at this month’s policy meeting.
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