Japan’s Prime Minister Shinzo Abe has announced a 108 trillion JPY stimulus package (989 billion USD), the largest in the history of the country, to help the economy soften or counteract the negative effects of the spread of the coronavirus, while Tokyo and six other economic hubs are expected to be in a state of emergency.

The package, equivalent to about 20% of the country’s economic output, will include a 6 trillion JPY cash distribution for households and small businesses affected by the virus. It will offer businesses a 26 trillion JPY tax and social spending deferral.

The first phase of the package aims to stop the loss of jobs and bankruptcies in business, while the second round of aid, once the virus is finally mastered, will try to support a V-shaped economic recovery, according to a government document.

“Given the crisis in the health front, the government was advised to prepare to declare a state of emergency”, said Shinzo Abe. “The government wants to help businesses move forward and protect jobs”, added he.

The number of infected with COVID-19 worldwide has crossed the border of 1 million cases, with more than 70,000 people dead as a result of the infection. Japan has been spared the pandemic that has plagued the economy and the healthcare system in Europe, the US and other regions, registering 3,500 cases of infection and 85 deaths so far, although the percentage of newborns is rising again, especially in Tokyo.

Authorities in Japan have identified the pandemic as the “biggest crisis” the global economy has faced since World War II.

The measures provide for larger subsidies for companies that keep their workers employed and continue to pay them for work. Companies affected by the virus will be able to defer tax payments for one year. Some smaller companies will also get a discount on real estate fees, which can be reduced to zero.

Economists expect Japan’s economy to be in a deep recession because of COVID-19 as export markets have been paralyzed, the summer Olympics postponed and the country’s capital facing the prospect of tougher measures.

To finance the package, the government will issue bonds, further burdening public debt – the largest in the industrial world, which is more than twice the size of the Japanese economy.

Japan will increase the issuance of government bonds by 16 trillion JPY to about 145 trillion JPY, which will be sold on the market this fiscal year, marking the first increase in the annual bond issue in four years.