Macroeconomic Stabilization in Japan

During the COVID-19 Crisis

Introduction
The COVID-19 pandemic disrupted global economies, causing unprecedented challenges for
governments, industries, and individuals. Japan, as the world’s third-largest economy, faced
unique economic hurdles due to its demographic structure, export-driven economy, and
prolonged battle with deflation. The pandemic struck at a time when Japan was already
grappling with structural challenges, including a rapidly aging population and low
productivity growth in certain sectors. Furthermore, Japan’s reliance on international trade
made it vulnerable to global supply chain disruptions and declining external demand.

This report examines Japan’s macroeconomic stabilization strategies during the COVID-19
crisis from the perspectives of various stakeholders, including the Bank of Japan (BoJ), the
government, industries, households, and commercial banks and an economist’s
perspectives. It highlights the specific policy interventions implemented to address the
crisis, evaluates their effectiveness, and explores the lessons learned for future crises.

The pandemic’s global nature meant that Japan, despite its initial success in containing the
virus, eventually had to grapple with severe economic disruptions. Unlike past crises,
COVID-19 caused simultaneous supply and demand shocks, necessitating a multifaceted
policy response. This report seeks to provide a comprehensive understanding of Japan’s
approach and its implications for the future. By analyzing these strategies, we can also draw
valuable insights into the challenges and opportunities faced by advanced economies during
unprecedented global emergencies.

Fig.1. Japan's quarterly GDP growth during COVID-19 period

Central Banker’s Perspective (Bank of Japan)

The Bank of Japan (BoJ) played a pivotal role in mitigating the economic fallout of COVID-19
by implementing aggressive monetary policies. Central banks worldwide faced the dual
challenge of ensuring financial stability and supporting economic recovery, and the
BoJ’s actions reflected this balance.

-Monetary Easing Measures: The BoJ expanded its quantitative easing (QE) program,
purchasing government bonds, corporate bonds, and commercial papers to inject liquidity
into the economy. By April 2020, the BoJ committed to purchasing an unlimited amount of
government bonds to maintain market stability. These measures ensured that financial
markets remained functional, preventing a liquidity crunch that could have exacerbated the
crisis. The scale of bond purchases was unprecedented, signaling the BoJ’s commitment to
stabilizing the economy.

-Interest Rate Policies: The BoJ maintained its negative interest rate of -0.1% to
encourage lending and investment. Additionally, it provided zero-interest loans to financial
institutions to support small and medium-sized enterprises (SMEs). This policy aimed to
ensure that businesses, particularly those in vulnerable sectors, had access to credit during
the downturn. Furthermore, the BoJ introduced targeted facilities to support sectors
disproportionately impacted by the pandemic, demonstrating flexibility in addressing
specific economic challenges.

-Support for Financial Institutions: The BoJ launched a special funding program to
provide ¥110 trillion in financial assistance to banks lending to pandemic-affected
businesses. This program incentivized banks to extend credit to struggling firms, ensuring
that temporary liquidity issues did not lead to widespread bankruptcies. It also encouraged
financial institutions to defer loan repayments for businesses under stress, thereby
preventing a domino effect of defaults.

-Forward Guidance and Communication: The BoJ emphasized transparent

communication with markets and the public, outlining its policy objectives and expected
outcomes. This forward guidance aimed to reduce uncertainty, stabilize expectations, and
reinforce the BoJ’s commitment to supporting economic recovery. Clear messaging helped
maintain confidence in the financial system during turbulent times.

Challenges:
Deflationary Pressures: Despite monetary easing, Japan’s economy continued to face
deflationary pressures, with consumer prices declining due to weak demand. The
persistence of deflation highlighted the limits of monetary policy in addressing structural
issues, such as Japan’s aging population and low productivity growth.
Low Interest Rates: The BoJ’s ability to cut rates further was constrained by already low
levels, reducing the effectiveness of traditional monetary tools. This limitation underscored
the need for innovative approaches to stimulate economic activity.

Dependency on Fiscal Measures: The BoJ’s efforts, while significant, required

complementary fiscal policies to achieve broader economic stabilization. The interplay
between monetary and fiscal interventions highlighted the necessity of coordinated action
during crises.

The BoJ’s actions, while critical, underscored the need for complementary fiscal measures to
achieve comprehensive economic stabilization. Its experience during the COVID-19 crisis
has provided valuable lessons on the importance of adaptability, coordination, and
innovation in monetary policy during unprecedented global challenges.

Government’s Perspective

The Japanese government implemented expansive fiscal policies to cushion the pandemic’s
impact, demonstrating a proactive approach to mitigating economic challenges. Recognizing
the limitations of monetary policy alone, fiscal interventions were designed to address
immediate needs while laying the groundwork for longer-term recovery. These measures
targeted a broad spectrum of stakeholders, including households, businesses, and public
health systems.

Fig. 2 Japan's public debt as a percentage of GDP from 2019 to 2022:

Stimulus Packages: The government announced stimulus packages totaling over ¥230
trillion (approximately 40% of GDP), one of the largest in the world relative to GDP. These
packages underscored the government’s commitment to preventing a prolonged economic
slump. Key measures included direct cash transfers to individuals, subsidies for
businesses, and tax deferrals. Importantly, the stimulus also included significant
allocations for green and digital transformation initiatives, reflecting an effort to build
resilience for the future.

Support for Households and Businesses:

Cash Payments: A universal cash transfer program provided ¥100,000 to all residents,
helping to stabilize consumption during the crisis. This measure was particularly significant
for low-income households, who were more vulnerable to income shocks. Additionally,
supplementary payments were made to families with children and single-parent
households to address heightened financial pressures.

Employment Adjustment Subsidy: Businesses received subsidies to retain employees,

reducing the risk of mass layoffs. The program’s focus on preserving employment
relationships aimed to facilitate a quicker recovery once economic conditions improved.
Training programs were also introduced to upskill workers during the downturn, preparing
them for post-pandemic opportunities.

Public Health Spending: The government allocated significant funds to bolster healthcare
infrastructure, procure vaccines, and support medical staff. Investments in testing, contact
tracing, and vaccination campaigns were critical to controlling the virus and enabling
economic recovery. Emergency budgets also supported the production and distribution of
medical equipment, ensuring that healthcare providers had the necessary resources.

Local Government Support: Funds were distributed to regional governments to address

localized needs, such as supporting small businesses, enhancing public health responses,
and addressing unique challenges in rural areas.

The following table provides an overview of the fiscal stimulus distribution:

Sector Allocation (¥ Trillion) Percentage of Total (%)

Healthcare 40 25
Households 30 18.75
Business Support 50 31.25
Local Governments 20 12.5

Challenges:
Public Debt: Japan’s public debt, already the highest among developed nations, exceeded
250% of GDP. The pandemic’s fiscal demands raised concerns about long-term debt
sustainability, prompting debates about balancing immediate relief with future fiscal
responsibility.
Administrative Inefficiencies: Delays in disbursing aid highlighted weaknesses in Japan’s
bureaucratic processes, with outdated systems and limited digital integration slowing down
implementation. Streamlining these processes and embracing digital solutions remain
priorities for future crisis management.

Equity Concerns: While universal measures provided broad support, some vulnerable
groups, such as non-regular workers and freelancers, faced barriers in accessing aid,
underscoring the need for more inclusive policy frameworks.

The government’s fiscal measures complemented the BoJ’s monetary policies, creating a
coordinated response that mitigated the worst effects of the pandemic. By balancing
immediate relief with forward-looking investments, the government sought not only to
stabilize the economy but also to position Japan for a resilient recovery. However,
addressing structural challenges, such as an aging population and regional disparities,
remains essential for sustaining long-term growth.

Industries’ Perspectives

Government Support for Industries

Japan's industrial sector, particularly manufacturing, tourism, and retail, was severely
affected by the pandemic. To prevent widespread bankruptcies and job losses, the
government introduced a series of fiscal and monetary measures.

Subsidies and Grants:

- The Japanese government provided direct financial support to struggling businesses

through subsidies and grants. This included aid for small and medium-sized enterprises
(SMEs) to help them maintain liquidity during periods of low demand.

- Additional grants were targeted at sectors heavily impacted by the pandemic, such as
tourism and hospitality, ensuring that these businesses could remain operational despite
sharp declines in revenue.
Employment Adjustment Subsidy

- A key measure was the expansion of the Employment Adjustment Subsidy, which
encouraged businesses to retain employees by subsidizing wages. This helped in reducing
layoffs and preserving the workforce.

- The government simplified the application process for this subsidy to ensure timely
disbursement of funds to businesses in need.

Corporate Tax Deferrals

- Tax payment deferrals and reductions in corporate taxes were introduced to ease the
financial burden on companies.

- Companies experiencing significant losses were allowed to carry back losses to prior
years for tax refunds, improving their cash flow during the crisis.

Digital Transformation Initiatives

- The government promoted digital transformation by offering incentives for businesses to

adopt digital technologies. This included support for remote work infrastructure and online
business models, helping firms adapt to new market realities.
 - Partnerships were encouraged between large corporations and startups to foster
innovation, ensuring long-term competitiveness in the post-pandemic economy.

b) Monetary Policy Support by the Bank of Japan

The Bank of Japan (BoJ) played a pivotal role in ensuring financial stability during the crisis
by adopting accommodative monetary policies aimed at maintaining liquidity, supporting
credit flow, and preventing economic stagnation.

Lowering of Interest Rates

- The BoJ maintained ultra-low interest rates to facilitate borrowing and investment,
thereby encouraging both businesses and consumers to continue economic activities.

- Negative interest rate policies were sustained, ensuring that commercial banks continued
to lend rather than hoarding reserves.

Quantitative Easing (QE)

- The central bank expanded its quantitative easing program, purchasing government
bonds, corporate securities, and exchange-traded funds (ETFs) to inject liquidity into the
economy and stabilize financial markets.

- This aggressive asset purchase strategy aimed to lower long-term interest rates and
encourage corporate borrowing and spending.

Special Loan Programs

- Special financing programs were launched to provide low-interest loans to affected

businesses, particularly SMEs and micro-enterprises, ensuring that even the most
vulnerable companies could access capital during the crisis.

- The BoJ introduced a new framework to incentivize lending by financial institutions,

offering zero-interest, risk-free loans to banks that increased their credit to pandemic-hit
businesses.

Support for Financial Markets:

- The BoJ intervened in the foreign exchange markets to ensure stability, given the volatile
movements in currency values during the pandemic.

- Measures were also taken to stabilize the stock and bond markets, including increased
purchases of ETFs and real estate investment trusts (REITs).
Macroeconomic Stabilization Measures for Households

Japan's households were significantly affected by the economic slowdown resulting from
the COVID-19 pandemic. Recognizing the importance of maintaining household stability and
ensuring a basic standard of living, the Japanese government implemented several
measures aimed at providing financial relief, safeguarding employment, ensuring housing
security, and supporting essential services such as healthcare and education.

Direct Financial Assistance

To mitigate the immediate financial impact on households, the government launched

various direct financial support initiatives.

Universal Cash Transfers:

- A one-time cash transfer of ¥100,000 per resident was provided regardless of income
level. This measure was intended to boost consumer spending and provide immediate
financial relief to all households.

- The cash transfer program was complemented by local government initiatives that
provided additional financial support to low-income families.

Childcare and Family Support

- Financial aid was extended to families with children through increased child allowances
and subsidies for childcare services.

- Additional payments were made to single-parent households to alleviate their economic

burden during the crisis.

Employment Protection and Income Security

Recognizing the risk of widespread job losses, the government introduced employment
protection measures designed to safeguard household incomes.

Employment Retention Subsidies

- Employers who retained their workforce despite reduced business activity were eligible
for subsidies covering a significant proportion of wages. This ensured that employees
continued to receive salaries even if their workplaces faced temporary closures.

- The government increased the subsidy rate for smaller businesses and streamlined the
application process to expedite support.
Expanded Unemployment Benefits

- Unemployment insurance benefits were enhanced to support those who lost their jobs due
to the pandemic. Eligibility criteria were relaxed, and the benefit period was extended.

- Special assistance was provided to non-regular and part-time workers who were
disproportionately affected by layoffs.

Support for Freelancers and Self-Employed Individuals

- Financial grants and zero-interest loans were made available to freelancers and self-
employed workers, many of whom experienced significant income reductions due to the
pandemic.

Housing Security

To prevent evictions and ensure housing stability, several initiatives were implemented:

Rent Subsidies

- Rent subsidies were provided to households struggling to meet their housing costs. The
eligibility threshold was broadened to include a larger number of low-income families.
Mortgage Relief

- Temporary mortgage payment deferrals were offered to households experiencing

income loss. Lenders were encouraged to negotiate flexible repayment terms with affected
borrowers.

Healthcare and Education Support

The government prioritized healthcare access and continuity of education to minimize long-
term social impacts.

Healthcare Support

- COVID-19 testing, treatment, and vaccinations were provided free of charge. Additionally,
subsidies were introduced for medical institutions to ensure they could handle the
increased patient load.

- Mental health support services were expanded, recognizing the psychological toll of the
pandemic on households.

Educational Continuity

- Schools were equipped with digital infrastructure to facilitate online learning. Financial
aid was provided to low-income families to purchase devices and access high-speed
internet.

- The government introduced special programs to support students at risk of falling

behind, including tutoring services and additional learning resources.

These comprehensive measures helped stabilize household consumption and maintain

social stability during one of the most challenging periods in recent history.

Commercial Banks’ Perspectives

Commercial banks in Japan played a critical role during the COVID-19 pandemic by ensuring
continued access to credit for businesses and households. The government and the Bank of
Japan (BoJ) implemented several targeted measures to support the banking sector and
mitigate financial risks.
Liquidity Support

Ensuring adequate liquidity in the banking system was crucial to prevent a credit crunch
during the crisis.

Loan Guarantee Programs

- The government introduced extensive loan guarantee schemes, covering a significant

portion of loans extended to SMEs. This reduced the lending risk for banks and encouraged
them to provide credit to businesses facing liquidity shortages.

- Special attention was given to sectors hit hardest by the pandemic, including tourism,
hospitality, and retail, ensuring their continued access to financing.

Special Loan Programs

- In coordination with the BoJ, commercial banks were provided with zero-interest, risk-
free loans aimed at supporting credit expansion. These loans came with incentives for banks
to lend to small businesses and pandemic-affected sectors.
Open Market Operations

- The BoJ expanded its open market operations, offering commercial banks short-term
funds at favorable rates to maintain liquidity and stabilize money markets.

Figure. Liquidity Support Framework implemented during the COVID-19 pandemic, highlighting measures
like loan guarantees, special loan programs, and open market operations to ensure financial stability

Regulatory Easing

To enhance the lending capacity of banks, regulatory frameworks were temporarily

adjusted.

Capital Adequacy Relief

- Capital adequacy requirements were relaxed, allowing banks to deploy more capital
toward lending rather than holding it in reserve. This provided them with greater flexibility
to support businesses and households.
Loan Classification Flexibility

- Banks were allowed to classify pandemic-related loans under relaxed criteria, reducing
the immediate pressure of provisioning for potential non-performing loans (NPLs). This
measure helped banks continue their lending activities without fearing regulatory penalties.

c) Non-Performing Loans (NPL) Management

With rising risks of defaults due to the economic downturn, measures were introduced to
help banks manage their loan portfolios effectively.

Asset Purchase Programs

- The BoJ purchased large volumes of corporate bonds and commercial paper from banks,
improving their liquidity position and reducing credit risk on their balance sheets.

Debt Restructuring Support

- Commercial banks were encouraged to offer flexible repayment terms and debt
restructuring options to borrowers. This included deferring interest payments, extending
loan tenures, and reducing repayment amounts.

Special NPL Funds

- The government established special funds to assist banks in managing NPLs, ensuring
they could absorb losses without jeopardizing financial stability.

Digital Banking Initiatives

The pandemic accelerated the need for digital banking services, prompting significant
investments in financial technology.

Expansion of Digital Platforms

- Commercial banks invested in upgrading their digital platforms to offer seamless online
banking services, including loan applications, fund transfers, and customer support.

Collaboration with FinTech Firms

- Partnerships between banks and FinTech companies were fostered to drive innovation in
financial services. This included introducing new digital products tailored to the needs of
businesses and individuals during the crisis.

Cybersecurity Enhancements

- With increased reliance on digital services, banks prioritized strengthening their

cybersecurity frameworks to protect customer data and prevent fraud.
These stabilization measures ensured that Japan's commercial banks remained resilient
during the crisis, playing a vital role in the country's economic recovery.

Macroeconomic Impact of Government Policy

a) Economic Contraction and Recovery

Despite the implementation of comprehensive stabilization measures, Japan faced a severe

economic downturn in 2020, with the GDP contracting by 4.8%. The contraction was driven
by significant declines in both domestic consumption and exports, as global demand
plummeted during the pandemic's peak. However, government intervention through fiscal
stimulus, coupled with monetary easing by the Bank of Japan (BoJ), laid the foundation for a
gradual recovery. By mid-2021, Japan witnessed positive GDP growth rates, spurred by
improved consumer confidence and a rebound in industrial production.

Key factors contributing to the recovery included:

Effective Vaccination Rollout: The accelerated distribution of vaccines helped restore

economic activity by reducing infection rates and enabling the reopening of businesses.

Increased Government Spending: Public investments in infrastructure, healthcare, and

digital transformation stimulated economic activity and created jobs.

Resurgence in Exports: The recovery of global markets, particularly in Asia, boosted

Japan's export-driven industries, including automobiles and electronics.

b) Inflation and Deflationary Pressures

Japan's economy has historically grappled with low inflation, and the pandemic exacerbated
deflationary tendencies. Weak consumer demand and declining energy prices resulted in
subdued inflation throughout 2020. The BoJ continued its efforts to achieve a 2% inflation
target by maintaining ultra-loose monetary policies, including asset purchases and negative
interest rates.

In the post-pandemic period, inflationary pressures began to emerge due to supply chain
disruptions and rising commodity prices. By late 2021, inflation rates showed signs of
picking up, although they remained below the BoJ's target. Policymakers acknowledged the
need for balanced measures to prevent stagflation while supporting economic recovery.

c) Unemployment Trends
One of the notable outcomes of Japan's policy response was the relatively low official
unemployment rate, which peaked at around 3.0% during the crisis. This was significantly
lower than in many other advanced economies, thanks to strong job retention programs
such as the Employment Adjustment Subsidy. However, challenges persisted in the labor
market:

Underemployment: Many workers, particularly in the services sector, faced reduced hours
and lower incomes.

Non-Regular Employment: Japan's labor market is characterized by a high proportion of

non-regular workers, including part-time and contract employees, who were more
vulnerable to job losses during the pandemic.

To address these issues, the government introduced targeted support for non-regular
workers, including expanded unemployment benefits and reskilling programs aimed at
enhancing employability in emerging sectors.

d) Sectoral Performance

The impact of the pandemic varied across different sectors, with some industries recovering
faster than others:
Manufacturing: The manufacturing sector rebounded quickly, driven by strong demand for
exports and government incentives for digitalization and automation.

Tourism and Hospitality: These sectors faced prolonged recovery due to ongoing travel
restrictions and changes in consumer behavior. The government launched domestic
tourism campaigns, such as the "Go To Travel" initiative, to stimulate demand.

Retail:While traditional retail faced significant challenges, the e-commerce sector

experienced rapid growth. Many businesses adapted by expanding their online presence
and adopting digital payment systems.

Overall, Japan's recovery trajectory demonstrated resilience, with a focus on structural

reforms and innovation positioning the country for sustainable long-term growth.

Economist’s Perspective
The COVID-19 pandemic presented an unprecedented economic challenge, highlighting
both strengths and areas for improvement in Japan's macroeconomic framework. The
experience of managing the crisis has provided valuable insights that can inform future
policy decisions.

a) Strengthening Social Safety Nets

The crisis underscored the importance of comprehensive social safety nets to protect
vulnerable populations during economic downturns. Japan should enhance its welfare
programs by:

- Expanding unemployment benefits and job retention schemes.

- Providing targeted financial assistance to non-regular workers, freelancers, and self-

employed individuals.

- Improving access to affordable housing and healthcare services.

b) Enhancing Digital Infrastructure

The rapid shift toward digital solutions during the pandemic demonstrated the critical role
of digital infrastructure in maintaining economic activity. To build on this momentum, Japan
should:

- Increase investment in high-speed internet access, particularly in rural areas.

- Promote digital literacy and skill development across all segments of the population.

- Encourage businesses, especially SMEs, to adopt digital technologies by offering tax

incentives and grants.

c) Promoting Green Recovery

The post-pandemic recovery offers an opportunity to transition toward a sustainable

economy. Japan should prioritize green initiatives by:

- Investing in renewable energy sources such as wind, solar, and hydrogen.

- Supporting research and development in green technologies.

- Implementing stricter environmental regulations and providing incentives for sustainable

practices in industries.

d) Strengthening International Collaboration

The global nature of the COVID-19 crisis highlighted the need for international cooperation.
Japan should:

- Continue to engage actively in global economic forums, such as the G7 and G20, to foster
coordinated policy responses.

- Strengthen trade partnerships and diversify supply chains to reduce dependency on any
single country or region.

- Collaborate on global health initiatives, ensuring equitable access to vaccines and medical
supplies.

e) Enhancing Crisis Preparedness

To improve resilience against future shocks, Japan should develop a robust crisis
management framework by:

- Establishing a national pandemic response task force with clear protocols.

- Building strategic reserves of essential goods, including medical supplies and food.

- Conducting regular stress tests on financial institutions and key industries to assess their
readiness for potential crises.
Conclusion

The COVID-19 pandemic presented an extraordinary challenge, disrupting economic and

social systems globally. Japan, as the world’s third-largest economy, faced significant
obstacles owing to its unique demographic profile, export-driven economy, and persistent
deflationary pressures. However, the nation responded with a comprehensive and
coordinated policy framework, involving monetary easing by the Bank of Japan (BoJ),
expansive fiscal interventions by the government, and targeted support for industries and
households. This response not only mitigated the immediate economic impact but also laid
the foundation for a resilient and sustainable recovery.

The Bank of Japan played a pivotal role by adopting aggressive monetary policies to
maintain financial stability and support economic activity. Key measures included
expanding the quantitative easing (QE) program, maintaining negative interest rates, and
launching special funding programs to ensure liquidity in the financial system. These
actions helped prevent a liquidity crisis and ensured that businesses, especially small and
medium enterprises (SMEs), had access to credit during the downturn. Despite these
efforts, the persistence of deflationary pressures underscored the limitations of monetary
policy in addressing structural issues such as low productivity growth and an aging
population.

Complementing the BoJ’s monetary policies, the Japanese government implemented one of
the world’s largest fiscal stimulus packages, amounting to over ¥230 trillion, or
approximately 40% of GDP. This expansive fiscal intervention targeted various sectors and
stakeholders, providing direct financial assistance to households, subsidies to businesses,
and investments in healthcare and digital infrastructure. The universal cash transfer
program, employment adjustment subsidies, and rent relief measures were critical in
stabilizing household consumption and preserving employment during the crisis.

Moreover, the government prioritized long-term resilience by allocating significant

resources to green and digital transformation initiatives. By promoting renewable energy,
supporting digital adoption, and encouraging innovation through partnerships between
large corporations and startups, Japan aimed to strengthen its economy and enhance its
competitiveness in the post-pandemic world. However, challenges such as rising public debt
and administrative inefficiencies highlighted areas for improvement in future crisis
management efforts.
Industries, particularly manufacturing, tourism, and retail, were severely affected by the
pandemic, with many businesses facing sharp declines in revenue. To prevent widespread
bankruptcies and job losses, the government introduced targeted support measures,
including subsidies, grants, and tax deferrals. The expansion of digital platforms and the
promotion of remote work were crucial in helping businesses adapt to the new normal.
Despite these efforts, sectors such as tourism and hospitality continued to struggle,
reflecting the uneven nature of the recovery.

Households, being at the heart of the economic impact, benefited from a range of direct
support measures. The universal cash transfer of ¥100,000 per resident, childcare
subsidies, and enhanced unemployment benefits provided much-needed financial relief.
Additionally, investments in healthcare infrastructure, free COVID-19 testing and
vaccination, and mental health support services played a crucial role in ensuring public
well-being during the crisis. These measures helped stabilize consumption and maintain
social cohesion during a period of unprecedented uncertainty.

Japan’s response to the pandemic demonstrated the importance of coordinated policy

action, adaptability, and forward-looking investments in building economic resilience.
While the immediate impact of the crisis was mitigated, long-term challenges remain.
Addressing structural issues such as an aging workforce, low productivity growth, and
regional disparities will be critical to sustaining future growth. Enhancing social safety nets,
promoting digital and green transitions, and strengthening international collaboration will
be essential components of Japan’s long-term economic strategy.

In conclusion, the COVID-19 crisis highlighted both vulnerabilities and strengths within
Japan’s economic framework. The country’s experience underscores the need for agility,
innovation, and inclusivity in policymaking. By learning from this crisis and addressing
existing structural challenges, Japan can position itself for a more resilient and prosperous
future. Furthermore, its response offers valuable lessons for other advanced economies on
navigating global emergencies through coordinated and adaptive strategies. Ultimately,
turning crises into opportunities requires a balanced approach that prioritizes immediate
relief while fostering long-term transformation.