Japanese Prime Minister, Yoshihide Suga is planning an additional economic stimulus package worth US$180 billion.
He is likely to unveil a stimulus package within the next few months, according to a Bloomberg survey. All but one of 18 surveyed economists said the announcement would come before national elections that must be held by early fall.
2020 had three additional budgets. The new spending would come as Suga looks to shore up support amid widespread dissatisfaction with his handling of the virus and a vaccine rollout that’s lagged other developed nations.
Over the weekend, Tokyo voters chose not to give the ruling coalition a majority of the city’s assembly seats, a decision seen as a harbinger of what could come later in national elections.
How stimulus would be funded
Economists estimated the new stimulus package would be funded by an extra budget of between 10 trillion yen and 15 trillion yen, financed with 7.5 trillion yen in new government bonds. The survey didn’t ask analysts to specify where the remaining stimulus money would come from.
However, Japan typically includes contributions from private businesses to inflate the headline size of its packages. Japan’s economy is seen as having barely eked out growth last quarter amid stop-and-go restrictions to contain outbreaks.
With the country’s vaccine drive now gaining pace, most analysts see the government focusing its new spending on post-COVID growth measures, rather than more virus-fighting.
Analysts said they see 1 trillion yen being earmarked for revitalizing Japan’s semi-conductor industry, another 2 trillion yen for digitalization and 2 trillion yen on helping meet climate-change goals.
The new spending would follow three extra budgets already drawn up during the pandemic that added about 70 trillion yen to Japan’s debt pile.
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