Japan approves $490B stimulus as pandemic lingers

Japan’s government agreed Friday to spend $490 billion on stimulus measures, a move by its prime minister to boost an economy battered by coronavirus restrictions and by a supply chain crunch that has affected the country’s largest manufacturers.

Japan announced a partial easing of border restrictions this month and has lifted virtually all restrictions on its economy amid a falling virus caseload. And its rate of fully vaccinated people 76% of the population, according to a New York Times tracker is one of the highest among rich nations. But a ban on international tourists continues to weigh on economic growth.

The stimulus package, Japan’s largest to date, accounts for about 10% of the country’s economic output, officials said. Prime Minister Fumio Kishida said Friday that it could increase economic output about 5.6%.

“I want to bring Japan’s economy, which has been severely damaged, onto a trajectory of recovery,” he told reporters.

The package includes aid to struggling businesses and hospitals, money for strengthening semiconductor supply chains, and programs to encourage domestic tourism and investment in a nationwide university endowment fund.

It also includes a one-time cash handout of 100,000 yen, or $878, per child younger than 18 for households where the highest-earning parent is paid less than about $84,300 a year. About 9 in 10 households with children are eligible.

The cash handouts to young families are not especially popular. Critics have questioned the need for them in a country with an aging society.

Last spring, the government sent stimulus checks to every resident, but they did little to raise inflation or consumer spending. Analysts estimate that about 70% of the handouts went to household savings.