Japanese Prime Minister Shinzo Abe vows to protect economy as virus heightens recession fears

Japanese Prime Minister Shinzo Abe vowed to take whatever policy steps are needed to prevent the new coronavirus from dealing a severe blow to an economy already teetering on the brink of recession.

With investors fearful of a worldwide downturn, global shares on Friday were heading for their biggest weekly fall since the depths of the financial crisis in 2008, putting policymakers under pressure to take bolder action.

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Abe said the government had sufficient reserves to tap for emergency spending related to the epidemic, signaling he saw no immediate need to compile a fresh spending package.

"But I'm aware of views that if the virus spreads, it could have a huge impact on the economy," Abe told parliament on Friday. "We're therefore watching developments carefully."

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"If developments change, we'll ensure to take steps as needed to prevent the virus from becoming a huge downside risk to Japan's economy," he said.

Tokyo's benchmark Nikkei average, seen by Abe's administration as a barometer of the success of its "Abenomics" stimulus policies, closed down 3.67% on Friday.

The yen hit a one-month high against the dollar as investors flocked to the Japanese currency as a beacon of safety. A rising yen is an unwelcome move for the Bank of Japan worried it could undermine the export-reliant economy.

A senior Japanese finance ministry official said on Friday that market movements were reflecting the "shock" from the spreading of the virus, but refrained from commenting on specific market moves.