The Japanese government under Prime Minister Sanae Takaichi launched a large stimulus package worth approximately US$135 billion to encourage economic growth that is currently weakening. This stimulus includes energy subsidies for households, cash assistance, consumption vouchers, and tax cuts. The government is also targeting investments in strategic sectors such as semiconductors and artificial intelligence to strengthen long-term competitiveness.
This fiscal policy aims to restore consumer confidence after the Japanese economy experienced contraction and inflationary pressures. The government's spending push is expected to stimulate domestic consumption—a component that has long been a weak point of the Japanese economy—while also mitigating the impact of global slowdown. The government stated it will rely on increased tax revenues but remains open to the possibility of issuing additional bonds if necessary.
Nevertheless, financial markets are showing concerns over the increasing fiscal burden of Japan, which already has the highest debt ratio among advanced economies. The yen has weakened and bond yields have risen, reflecting investor doubts about fiscal sustainability. If the stimulus does not produce sufficiently strong growth, long-term risks such as debt pressure and market volatility could overshadow the short-term benefits of this package.
