Japanese PM approves $177b stimulus to mitigate inflation pain

Japanese Prime Minister Sanae Takaichi’s Cabinet approved the largest round of extra spending since the Covid-19 pandemic, deploying funds to address the frustrations of voters in a package that may unsettle investors scrutinising the nation’s finances.

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Residential buildings in Tokyo. The bulk of the measures in Japan's newly approved 21.3 trillion yen (S$177 billion) stimulus package is aimed at price relief - highlighting Prime Minister Sanae Takaichi's commitment to tackling persistent inflation, which has fuelled voter frustration.

(PHOTO: BLOOMBERG)

The total package is valued at 21.3 trillion yen (S$177 billion), with the bulk of the measures-11.7 trillion yen - aimed at price relief, the Cabinet Office said on Nov 21. That includes provisions to dole out 7,000 yen in subsidies for gas and electricity bills for each household over three months until March, a one-off 20,000 yen cash handout per child and two trillion yen in funds to aid regions.

"If the larger amount sends an unintended message to markets or overseas and ends up adding to yen-weakness risks, we may have to discount the expected economic impact of the package," said Ms Saori Tsuiki, senior economist at Mizuho Research & Technologies.