Japanese government approves record stimulus package to turn economy around



TOKYO (AP) – The Japanese cabinet on Friday approved a record-breaking 56 trillion yen ($ 490 billion) stimulus package, including cash donations and aid to struggling businesses, to help the economy emerge from the crisis. doldrums worsened by the coronavirus pandemic.

“The package has more than enough content and scale to provide a sense of security and hope for the people,” Prime Minister Fumio Kishida told reporters when announcing the plan earlier today.

The proposal got Cabinet approval that evening, according to the prime minister’s office. It still needs parliamentary approval. Kishida has promised swift action and parliament will meet next month, he said.

The plan includes distributing 100,000 yen ($ 880) each in monetary assistance to those 18 and under, and assistance for businesses whose sales have fallen due to the coronavirus measures.

Japan has never had a full lockdown during the pandemic, and infections have remained relatively low, with COVID-19-related deaths at around 18,000 people. But the world’s third-largest economy was already stagnant before the pandemic struck.

As part of the government’s “state of emergency,” some restaurants have closed or limited their hours, and events and theaters have restricted crowd sizes for social distancing. Apart from that, the shortage of computer chips and other auto parts produced in other Asian countries that have experienced severe epidemics and severe lockdowns has hurt the production of Japanese automakers, including Toyota Motor Corp., an economic pillar.

The government is considering restarting its “GoTo Travel” campaign of restaurant and store discounts, designed to encourage domestic travel. The campaign, which began last year, was halted when COVID cases began to rise.

Some critics have said the government’s approach is tantamount to “baramaki” or “handing out handouts” and is ineffective in generating long-term growth. Others say the cash assistance offered leaves behind childless families and other poor people.

The size of the latest package will push Japan’s debt upward since it will be financed by the issuance of bonds.

Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, said the government needs to focus on boosting spending and the GoTo campaign could prove effective.

The Japanese economy contracted at an annual rate of 3% between July and September, largely due to weak consumer spending. Analysts say the economy is unlikely to rebound until next year.

Japan has also pledged to allocate spending on vaccine research after it was criticized for its reliance on imported coronavirus vaccines. It has so far approved vaccines from Pfizer, Moderna and AstraZeneca.

Kishida, who promised “a new capitalism” for Japan, took office in October. In September, he became the leader of the ruling party, replacing his predecessor Yoshihide Suga, who stepped down after just a year in office, largely due to widespread public discontent over his inept response to the pandemic.

“We want to support the people who are suffering from the coronavirus, while bringing our country’s severely damaged economy back to health,” Kishida said of the latest package.


Yuri Kageyama is on Twitter https://twitter.com/yurikageyama



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