Japan’s Fiscal Stimulus
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Japan’s Fiscal Stimulus

Japan’s Fiscal Stimulus

Three significant factors have driven the Abe Government’s announcement of a massive fiscal stimulus at the end of last year. The stimulus, of around A$350 billion (including previously announced measures), was designed to mitigate the impact of the:

  • typhoon that struck the nation in September which caused widespread destruction throughout the nation.
  • decrease in exports as the Japanese companies  were affected by the U.S. – China trade war.
  • increase in Japan’s consumption tax (VAT) from 8% to 10%, which temporarily suppressed  consumer spending.

The budget allocation was designed to:

  • provide aid for natural disaster relief and improve the country’s resilience to disasters  (27%)
  • prepare the country for long-term growth post the Tokyo Olympics  (45%)
  • protect against economic deflation (28%)

In terms of measures for economic growth post the Olympics, the expenditure will be centred around further implementing Japan’s Society 5.0 policy – focusing on innovation embracing digitisation.

In addition, maintaining and consolidating the upward trajectory of inbound tourism  for Japan is another aspect of the budget allocation.