Japan’s Cabinet on Friday approved a ¥21.3 trillion (about US $135.4 billion) stimulus package aimed at renewing economic momentum and easing the impact of rising prices.
The package, the largest since the COVID-19 pandemic, includes ¥17.7 trillion in general account spending and ¥2.7 trillion in tax cuts. Among the measures are cash hand-outs of ¥20,000 per child, subsidies for electricity and gas bills, rice vouchers and other cost-of-living relief. The government expects the stimulus could raise GDP by around ¥24 trillion (approx. US $155 billion), or about 1.4 percent annually.
However, market reaction was cautious. The yen slid to 10-month lows and long-term Japanese government bond yields rose to record highs, as investors questioned Japan’s heavy borrowing and the timing of the fiscal boost. Japan’s national debt remains among the highest in the world, about 250 percent of GDP, posing questions about long-term fiscal sustainability.
Prime Minister Sanae Takaichi, serving less than two months in office, said the stimulus is designed to support households and strengthen national power through “wise spending.” Yet her minority government faces a critical task: securing parliamentary approval of a supplementary budget by year-end.
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