TOKYO: Prime Minister Shinzo Abe is doubling down on his stimulus measures with more than US$1 trillion of extra help to keep businesses and households afloat amid the coronavirus recession, a document obtained by Bloomberg showed yesterday.
The 117 trillion yen (US$1.1 trillion) package includes financing help for struggling companies, subsidies to help firms pay rent and several trillion yen for health care assistance and support for local economies, according to the document. The spending will be funded by a second supplementary budget of 31.9 trillion yen that breaks a record for extra budgeted spending set only last month, the document showed.
The latest aid was finalised after data last week confirmed Japan has sunk into a deep recession and polls showed support for Prime Minister Shinzo Abe’s cabinet dropping to a record low over its handling of the outbreak.
While the government ended its nationwide state of emergency this week and new virus cases have tailed off, the economic outlook is still grim. Analysts see gross domestic product shrinking by more than 20% this quarter and say the recovery could be slow as exports, tourism and business investment struggle to rebound.
Abe, speaking earlier this week, had said Japan would weather the pandemic by mounting the world’s biggest stimulus response, promising new measures that would bring the government’s support for the economy to around 40% of GDP.
The document showed the new measures match the overall size of April’s 117 trillion package, bringing the total to just under 234 trillion yen. “When popularity goes down, politicians tend to want to do something big, ” said economist Hiroshi Shiraishi at BNP Paribas SA. “These measures are designed to stop or alleviate the damage done by the pandemic on companies and individuals, not to boost growth. So even with this package, Japan’s pickup will be very gradual.” The government’s extra spending comes amid reassurances from the Bank of Japan (BoJ) it won’t allow bond yields to rise.
In a rare joint statement last week, the government and the central bank pledged tight cooperation to get funds to struggling businesses and shield the economy from the virus’s fallout. — Bloomberg
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