The Japanese government is expected to approve a new economic stimulus plan on Friday worth an amount equivalent to 200 billion euros to cushion this time the impact of inflation and the weak yen for the population.
Prices are rising in Japan, the world’s third largest economy, at the highest rate for eight years, although the 3% inflation rate remains well below those observed in the United States or Europe.
The yen has also lost more than 20% of its value against the dollar since the start of the year, prompting the Japanese government to intervene to support the local currency.
Details of the stimulus plan are due to be announced later today, but Prime Minister Fumio Kishida on Friday morning quoted a total spending figure of 29.1 trillion yen (200 billion euros). We hope for the rapid adoption of this plan which will be submitted to Parliament, he said on television.
Measures for energy and for businesses
It will include measures to reduce household energy bills, which have risen sharply since the invasion of Ukraine by Russia, to encourage companies to raise wages and to support the economy in the various regions of the country.
Already holding the world record in terms of public debt relative to gross domestic product (GDP), Japan has further increased this burden over the past two years, with several massive support plans for the economy to cushion the impact of the pandemic. of Covid-19.
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For the stimulus measures to be effective, the size of the plan must be huge, Yoshiki Shinke, chief economist at the Dai-ichi Life research institute, told AFP.
On Friday, the Bank of Japan unsurprisingly maintained its ultra-accommodative monetary policy, whose contrast with those of the other major central banks is weighing heavily on the yen.
It is understandable that the government is announcing further stimulus now, as the Japanese economy is facing weak demand due to rising prices, unlike the US where demand is strong with the Fed (US Federal Reserve) which tries to cool inflation, Mr. Shinke added.