Japan approved a 39 trillion yen (US$250 billion) economic stimulus package Friday centred around initiatives it said were aimed at boosting individual incomes.
The broad plan passed by the Cabinet is the centrepiece of Prime Minister Shigeru Ishiba’s recently installed administration. It provides support for digital innovation in the world’s fourth largest economy, subsidies to defray for rising energy costs and help for low-income households.
The plan is designed to instill a sense of “well being” in the Japanese people, the government said, using the English phrase.
Although Japan has managed weak growth in recent quarters, the long-term outlook for the economy and for the country’s standing in the world is uncertain. The plan includes measures to address the country’s falling birthrate, which is one of the lowest among developed nations, help for working women and for the elderly.
The plan also calls for raising the annual tax-free salary threshold from the current 1.03 million yen ($6,640). The new ceiling is not yet decided. But a level of 1.78 million yen (US$11,500) has been proposed.
“During the past 30 years, our nation has overcome various challenges, including deflation and confusion that followed the burst of the ‘bubble economy,’ the global financial crisis, various natural disasters and the difficulties stemming from the coronavirus pandemic,” documents provided by the Ministry of Economy, Trade and Industry said.
The government says signs of growth are evident, but Japan must avoid a negative spiraling of lower prices similar to an earlier protracted bout of deflation and attain sustainable wage increases to support growth.
The package promised help for small and medium-size businesses, for regional economies, farms and creative content like animation.
The ruling Liberal Democratic Party and its coalition partner lost their majority in the lower house of Parliament last month in an election.
They face the challenge of maneuvering for support among various opposition parties. Some analysts already are projecting that Ishiba’s premiership will be relatively short-lived.