Ja­pan’s prime min­is­ter un­veils new $266 bil­lion stim­u­lus pack­age

The Myanmar Times - - International Business -

JA­PAN launched an eco­nomic stim­u­lus pack­age worth more than 28 tril­lion yen (US$266 bil­lion) yes­ter­day, days be­fore the cen­tral bank is ex­pected to un­veil its own growth­boost­ing mea­sures.

Prime Min­is­ter Shinzo Abe an­nounced the pro­gram in a speech in south­west­ern Ja­pan, giv­ing few de­tails ex­cept to say it would in­clude about 13 tril­lion yen in fis­cal mea­sures in­clud­ing gov­ern­ment spend­ing.

More high­lights of the pack­age were ex­pected next week when the cabi­net is due to ap­prove the mea­sures an­nounced in the city of Fukuoka.

Mr Abe promised a stim­u­lus pack­age – which ear­lier re­ports had var­ied at be­ing worth 10 to 30 tril­lion yen – after Bri­tain’s vote last month to quit the Euro­pean Union sparked a rally in the yen that threat­ened prof­its at Ja­pan Inc.

Traders tend to buy Ja­pan’s cur­rency as a safe bet in times of tur­moil or un­cer­tainty. But it makes the coun­try’s ex­porters less com­pet­i­tive overseas and takes a bite out of their bot­tom line.

On cur­rency mar­kets, the dol­lar jumped as high as 106.54 yen from around 105.01 yen in the morn­ing, after Fuji Tele­vi­sion flagged the stim­u­lus yes­ter­day af­ter­noon.

It was sit­ting at 105.54 yen after the an­nounce­ment.

The news comes as spec­u­la­tion mounts that the Bank of Ja­pan will fur­ther ease mone­tary pol­icy after a two-day meet­ing on July 29.

Since tak­ing the helm more than three years ago BoJ gov­er­nor Haruhiko Kuroda has over­seen a mas­sive as­set-buy­ing plan that now stands at an un­prece­dented 80 tril­lion yen an­nu­ally.

The scheme is a cor­ner­stone of Mr Abe’s push to beat years of de­fla­tion and kick­start growth, dubbed Abe­nomics.

But while Mr Kuroda has in­sisted the cen­tral bank’s tar­get to reach 2 per­cent in­fla­tion is re­al­is­tic, the BoJ has been forced to push back its time­line for meet­ing that goal sev­eral times.

The gov­ern­ment and cen­tral bank have come un­der in­creas­ing pres­sure to do more for the econ­omy as a string of weak read­ings and sag­ging busi­ness con­fi­dence high­light a long-run­ning weak­ness in Ja­pan’s econ­omy.

On July 29 Ja­pan is due to re­lease monthly eco­nomic data that could fac­tor into the BoJ’s de­ci­sion on whether to move or not.

The last fig­ures painted a wor­ry­ing pic­ture, with spend­ing by Ja­panese house­holds fall­ing while in­fla­tion dropped for a third-straight month.

While the labour mar­ket re­mains tight, there are grow­ing con­cerns about sec­ond quar­ter eco­nomic growth. Ja­pan dodged a re­ces­sion in the first three months of the year.

Mean­while, the Bank of Ja­pan’s most re­cent Tankan sur­vey showed con­fi­dence among small firms and non-man­u­fac­tur­ers wors­ened dur­ing the sec­ond quar­ter of the year.

The re­port is the most com­pre­hen­sive in­di­ca­tor of how Ja­pan Inc is far­ing.

Mr Abe’s pack­age comes about two weeks after he claimed vic­tory for his rul­ing coalition in par­lia­men­tary elec­tions, de­spite luke­warm public sup­port for his eco­nomic poli­cies.

The blue­print – a mix of mas­sive mone­tary eas­ing, gov­ern­ment spend­ing and red-tape slash­ing – had brought the yen down from record highs and made Ja­pan’s ex­ports more com­pet­i­tive but that has not been enough to de­liver con­sis­tent growth. –

Photo: AFP

Con­tain­ers are trans­ferred onto trucks at an in­ter­na­tional con­tainer pier at the port in Tokyo.

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