Japan has designed a $103 billion subsidy and stimulus package to counteract the economic impact of inflation.
The Japanese government stated that it aims to take more steps later this year to support long-term changes.
This was disclosed by Prime Minister, Fumio Kishida on Tuesday, according to Reuters
What they are saying
According to Kishida, the administration would prepare an extra budget and enact it during the current legislative session to refill reserves and secure funding to deal with any reappearance of COVID-19 infections or extended increases in fuel prices.
He stated that the package was meant to defeat the effects of inflation and propel economic growth. He said, “We must prevent rising fuel and raw material costs from disrupting a recovery in economic and social activity from the pandemic.”
Aside from the relief package, the government will lay out after the upper house election a “comprehensive” package of measures to spearhead change in Japan’s society, Kishida said.
Kishida said the package would contain actions to assist Japan to become a carbon-neutral society as well as measures to advance the administration’s wealth-redistribution-focused economic policy.
“We need to act pre-emptively looking at the medium- to long-term horizon,” he said.
What you should know
- Inflation in Japan is continuing to accelerate, hitting a 26-month high as more businesses pass on rising raw material and energy costs to consumers.
- Japan’s core consumer price index (all products excluding fresh foods) climbed 0.8% in March compared to the same month the previous year, the fastest increase since January 2020. Inflation was 0.2% in January and 0.6 per cent in February.
- Kishida is under pressure to increase fiscal expenditure ahead of an upper house election in July, putting Japan out of step with many Western countries that are gradually weaning themselves off of crisis-mode stimulus measures.
- The $132 billion rescue package, which will be funded primarily from reserves set aside in the current fiscal year’s budget, will include measures to cope with the immediate impact of rising prices, such as gasoline wholesaler subsidies and cash distributions to low-income families with children.
- Furthermore, direct government spending will account for 6.2 trillion yen of the total. Non-direct spending measures, such as private-sector financing, make up the rest.