The Strategist

Japan unveils $ 120B fiscal stimulus package

12/05/2019 - 08:54

Japan introduced a $ 120 billion fiscal stimulus package to support the growth of the world's third largest economy, Reuters reports.

Chatham House
Chatham House
Japanese Prime Minister Shinzo Abe announced a fiscal measures package worth 13 trillion yen ($ 119.7 billion). The government is expected to unveil the details of the package after it is approved by the cabinet.

“We managed to put together a strong political package,” Abe said at a meeting of the ruling party’s legislators and government officials on Thursday.

"It is based on the three pillars of disaster recovery and security, providing intensive support to overcome bearish economic risks and maintain economic viability after the Tokyo Olympics," the prime minister added.

The size of the package is 25 trillion yen ($ 230 billion), taking into account government loans, loan guarantees and private sector spending, Reuters sources said this week.

Costs will be allocated to the supplementary budget for the current fiscal year ending in March and the budget for the upcoming fiscal year starting in April, which will be drawn up later this month.

At the end of November, the head of the Bank of Japan Haruhiko Kuroda approved the government’s plans to draw up a package of budget expenditures to deal with natural disasters and measures to support the economy in the face of growing global risks.

The problems associated with a series of recent natural disasters and the potential blow to Japan’s economy from slowing growth abroad “should be better addressed by the government through fiscal and structural policies,” said Kuroda. “At the same time... the fiscal space for the Japanese government is somewhat limited, so reasonable costs are required,” he added.

Earlier last month, the International Monetary Fund lowered its forecast for Japan's GDP growth for the third time this year and called on the government and central bank to expand cooperation to support the economy.

The IMF lowered its growth forecast for the world's third largest economy in 2019 from 0.9% to 0.8%. Next year, growth is expected to slow to 0.5%.


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