A new economic stimulus package worth over 28 trillion yen ($275 billion) was approved by Japan’s Cabinet Tuesday. The Japanese economy has been in poor health for a while, and previous recovery attempts have been stalling.
Yoshihide Suga stated that Prime Minister Shinzo Abe’s package had been endorsed by Japan’s cabinet Tuesday, and would be discussed by an extraordinary session of the Japanese parliament next month. The primary objective of the cash injection is to give the Japanese economy a kick and get it back on the road to recovery. The ultimate objective is to increase the country’s GDP by 1.3%.
The Prime Minister commented that the package was intended as “an investment for the future” and it will be focused on specific objectives. One of these concerns the labor force. Japan’s pool of labor has been slowly drying up as the population ages. Part of the stimulus package is to help overcome this threat to the Japanese economy by supporting the care industry for children and the elderly. This will enable more women to take up full-time employment.
Tourism in Japan has been hit over the past few years due to the effect of earthquakes and tsunamis. The package will increase spending on projects to improve infrastructure for tourism and to redevelop the disaster zones created by a series of fatal earthquakes. This includes a series of quakes this year in the Kumamoto region of the southern Japanese island of Kyushu one of which was magnitude 7.3. Redevelopment is also needed for parts of north-eastern Japan which suffered earthquakes and a tsunami in 2011.
Part of the cash injection will provide support for small businesses and families on low income. Japan is still the world’s third largest economy, although Abe has been trying to improve growth and boost the Japanese economy through spending. Monetary easing sometimes works, but in Japan’s case, improvement has been slower than hoped for. This current injection is intended to reverse a drop in the rate of growth.
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