Japan PM advisers call for massive stimulus amid coronavirus

By Tetsushi Kajimoto and Daniel Leussink

TOKYO (Reuters) - Private-sector advisers to Japanese Prime Minister Shinzo Abe urged the government on Tuesday to implement major measures to battle the coronavirus epidemic, paving the way for him to roll out stimulus.

The advisers' recommendation, issued at a meeting of the government's top economic advisory council, called for fiscal policy measures that can support the economy throughout 2020.

"The utmost priority is to provide a sense of security by protecting employment, households and small and mid-sized firms. To achieve this end, we should mobilise all policy measures," the advisers said in a statement.

They also said the output gap, which measures the difference between an economy's actual and potential output, could widen to about 20 trillion yen in the March quarter if the economy slumps to the same extent as in the previous quarter.

The recommendation comes after the ruling coalition, earlier in the day, called on the government to secure a stimulus package worth at least 60 trillion yen ($553 billion), with 20 trillion yen in direct spending.

Abe on Saturday ordered his cabinet to compile an unprecedented package of steps - including fiscal spending, monetary policy and tax measures - to support the world's third-largest economy.

The advisers urged the government to adopt macroeconomic policies to counter rising deflationary pressures around the world and escape a vicious economic cycle, while also calling on the Bank of Japan to work with the government on appropriate and flexible monetary policy.

"While the prospect for the future remains uncertain, companies are restraining investment and consumers are holding back on spending. If such situation is prolonged, we would return to deflation," they said.

Tokyo recorded more than 70 new coronavirus infections on Tuesday for its highest tally in a single day, as pressure built on Abe to order a lockdown with a minister saying Japan's containment strategy was stretched to the limit.

Domestic cases topped 2,000, and public broadcaster NHK said 78 cases in the capital took its tally of infections past 500.

($1 = 108.4600 yen)

(Reporting by Tetsushi Kajimoto and Daniel Leussink)