The record ¥15.4 trillion stimulus package may give the economy a short-term boost, but leave it saddled with a debt burden that will smother future growth, economists have said.
The plan unveiled Friday by Prime Minister Taro Aso, who faces a general election this year, is aimed at creating jobs in an economy heading for the worst postwar recession. Equal to 3 percent of gross domestic product, the measures will add to debt that the Organization for Economic Cooperation and Development already forecasts will rise to 197 percent of GDP next year.
"The stimulus will probably prevent Japan from falling apart in the short term, but it will leave a massive bill for the future," said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo. "The package doesn't do anything to promote a sustainable economic recovery."