Japan’s government is set to announce details of a 28 trillion yen (US$273 billion) stimulus package on Tuesday as it seeks to bolster an economy threatened by a strengthening yen and weak consumer spending, Bloomberg reports.
Prime Minister Shinzo Abe flagged the size of the stimulus package in a speech last week, saying more investment was needed to expand the world’s third-largest economy.
He said it would be used to provide better port facilities for cruise ships and accelerate the construction of a high-speed maglev train line.
About 7 trillion yen of the total will consist of actual spending, Bloomberg said, citing a person familiar with the matter, with the rest being made up of loans and other financing – probably spread over several years.
The cabinet’s expected approval of the package comes as exporters grapple with the yen’s rise, Britain’s vote to leave the European Union and a slowdown in emerging economies.
At the same time, concern is growing that the Bank of Japan is running out of options for further easing, after it made only minor policy adjustments at a meeting last week.
“The fiscal spending will probably include public works spending, so we can expect something of an economic boost,” said Masaki Kuwahara, an economist at Nomura Securities Co. in Tokyo.
But such growth may not be sustainable, he added.
“What Japan needs to do is to spur more demand and increase productivity by pushing through deregulation, increasing the nation’s potential growth rate.”
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