Highly indebted Japan wants to cushion the consequences of rising inflation for the population with an economic stimulus package worth billions. It includes government spending of 29.1 trillion yen (196 billion Swiss francs), the Japanese government announced Friday.
Including municipal and private sector spending, the package is a whopping 71.6 trillion yen. Prime Minister Fumio Kishida, who fights against falling polls, wants to use the money mainly to finance subsidies for rising electricity bills of households and companies.
The government is likely to finance spending with more government bonds, despite the already high government debt. It plans to present a supplementary budget shortly, which must be approved by Parliament.
Rising inflation is hitting Japan at a time when the world’s third-largest economy, ahead of Germany, is recovering more slowly than other major economies. The situation is exacerbated by the rapid weakening of the yen as it increases import costs for the country with few natural resources.
According to experts, the yen is also mainly weighed down by the monetary policy of the Bank of Japan, which, unlike many other central banks, does not fight inflation in the country. Although this is significantly lower than in many other countries, it is relatively high by Japanese standards. As expected, the Bank of Japan (BoJ) decided on Friday to stick to its previous course of extremely easing monetary policy.
In addition, the central bank raised its inflation forecast for the fiscal year ending March 2023 from 2.3 to 2.9 percent. At the same time, the economy will grow by only 2.0 percent instead of the previously expected 2.4 percent.
The Bank of Japan thus continues to resist the trend towards monetary tightening, despite rising inflation. The short-term interest rate should remain at minus 0.1 percent and the long-term interest rate around zero. (sda/awp/dpa)
Soource :Watson
I’m Ella Sammie, author specializing in the Technology sector. I have been writing for 24 Instatnt News since 2020, and am passionate about staying up to date with the latest developments in this ever-changing industry.
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