TOKYO – In a bid to ease the pain of COVID-19 and rising oil prices Japan will require fiscal spending worth 40 trillion yen ($350 billion) as part of its economic stimulus package. Prime Minister Fumio Kishida November 19 indicated a stimulus package “worth several tens of trillion yen” to spur the economic growth of Japan, which is yet to recover from the effects of coronavirus.
Japan is likely to go for new debt to support the spending plan. Some experts are of the opinion that the spending is far bigger than the output gap of 22 trillion yen. However, some analysts pointed out that despite higher spending, the impact would be limited on markets. It is because the Bank of Japan would keep borrowing costs low under its yield curve control policy.
Japan has been facing some serious economic problems, including the surge in global crude oil prices, the enormous chip shortage and supply-chain constraints. The supply bottlenecks adversely affected consumption and output, forcing a decline in the third-quarter GDP numbers of the country. Meanwhile, Economy Minister Daishiro Yamagiwa reiterated that Japan would prepare flexible measures on soaring energy costs in the stimulus package. “Steps will focus on sectors such as agriculture, forestry and fisheries as well as logistics firms, who cannot make a living without using fuel,” he told reporters.
Boost for universities
Some of the other measures being planned include increasing the domestic production of semiconductors. Besides the government plans a 10 trillion yen ($87.5 billion) fund for universities with an aim to boost science and technological research. According to the plan, there would be cash payouts to citizens aged 18 or younger, which is estimated to cost about 2 trillion yen. There are also packages for small companies hit hard by the pandemic. It is estimated to be around 3 trillion yen.