Mass conformity to a mood of self-restraint in social celebration, financial investment and business activity because of Emperor Hirohito’s illness is likely to shave a little of the edge off Japan’s economic growth this year.
Although no hard data is available on the cost of canceling events and contracts since the emperor collapsed Sept. 19, analysts estimate that the phenomenon could dampen expansion of gross national product by 0.1 to 0.2 percentage points for fiscal 1988, which ends next March 31.
With the GNP, or total value of the country’s goods and services, forecast at nearly $3 trillion, that could mean a theoretical loss of $300 million to $600 million in national wealth. The Economic Planning Agency is monitoring the situation but does not consider the estimated loss in growth to be very serious, according to the Far Eastern Economic Review. GNP is still expected to grow 4% to 5% for the year.
“It sounds like a small number in terms of the overall economy,” said David Gerstenhaber, an economist at the Tokyo office of Morgan Stanley International, “but from the standpoint of the industries affected, it’s very significant.”
Hardest hit are hotels and caterers, who have had a rash of banquets and wedding receptions canceled; fresh seafood dealers, who have been left holding large inventories of celebratory food such as lobster, and entertainers and promoters, whose shows will not go on, at least not while the emperor is critically ill with what is reported to be abdominal cancer.
Brokers say veneration for the emperor, combined with concern over appearances, has put a chill on investment in the Tokyo stock market.
Indeed, the Ministry of Finance has warned investors not to speculate in so-called emperor stocks--printing, ink and paper companies that are expected to profit when calendars and documents have to be reprinted with the start of a new imperial era, by which Japanese traditionally count the years.
The word in Kabuto-cho, the Tokyo district equivalent to Wall Street, is that large institutional investors are keeping a low profile so as not to attract unwarranted attention, and criticism, with bold transactions. Trading volume has been low and prices flat in recent weeks as a result.
“A lot of investors think stock prices aren’t going to go anywhere until the emperor departs,” said James Vestal, an economist with Baring Securities. “That’s casting a cloud over the market.”
The psychology of the Hirohito death watch is far-reaching enough that one Tokyo analyst said a dealer called his office from London to check out a rumor circulating there.
Ad Agencies Feel Pinch
“Is it true,” the dealer asked, “that the Bank of Japan is propping up the dollar because it would be rude to have the yen appreciate dramatically while the emperor is ill?”
Advertising agencies reportedly have been hurt as clients cancel exuberant or aggressive campaigns deemed inappropriate at this sensitive time. A much needed boost to the economy of Nagoya, about 150 miles west of Tokyo, was lost when the local professional baseball team, the Chunichi Dragons, canceled its victory parade and celebration after clinching the league championship.
Despite some worry about an imperial recession, figures for retail sales have remained firm, analysts note. Department store sales in the Tokyo area rose by a solid 8.2% in September from the same month last year, suggesting that consumers are still shopping even though they may not be attending festivals and parties.
But an adverse impact on spending could come when the emperor dies and the preliminary mourning, already more than 5 weeks old, is replaced by the real thing. That is especially true if Hirohito succumbs during the December gift-giving season, when retail sales are traditionally highest.
It is generally assumed that there will be a six-week period of formal mourning, during which business activities will become even more subdued. No one seems to know for sure, however, if businesses will be closed or for how long, and what sort of protocol should be followed. It has been 62 years since the last emperor died, and precedent is foggy.
“A lot of businesses are out there trying to figure out what to do,” said Ron Napier, vice president for Japanese equity research at Salomon Bros. Asia. “They know they have to conform, but to what, they don’t know. That’s causing a lot of headaches. Our company contacted the embassies, and they don’t know, either.”
There are conflicting reports on whether the Tokyo Stock Exchange will stop trading. An informal Times survey of several stores and businesses elicited a unanimous reply that they would remain open “unless everybody else shuts down.” Some major Japanese banks have reportedly instructed branch managers to keep the doors open but dim the lights to avoid the appearance of trying to attract customers.
Government officials have refused to respond to questions about funeral arrangements and proper etiquette during the period of mourning, saying that to discuss the matter would be disrespectful while Hirohito is fighting for his life.