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Japan plans more economic stimulus measures

JIJI

The government has decided to hammer out more economic stimulus measures to address the rising uncertainty over the economy, officials said Friday.

Prime Minister Shinzo Abe is expected to announce the measures around the Group of Seven summit in Mie Prefecture in late May, the officials said.

The economy is flagging because of sluggish consumption and the economic slowdown in China. Preliminary gross domestic product data for the January-March quarter, due out in mid-May, may show a second consecutive contraction of the Japanese economy.

Against this background, calls for additional economic stimulus measures are beginning to increase in the ruling coalition, the officials said.

To help shore up the economy, Abe is expected to instruct government agencies to front-load public works projects under the fiscal 2016 budget as soon as the budget passes the Diet later this month.

The government is also seen setting a numerical target. In fiscal 2014, when Japan raised the consumption tax to the current 8 percent from 5 percent, the government requested at least 40 percent of the public works projects under the year’s budget be started by the end of June 2014 and 60 percent by the end of September.

But the front-loading of public works could cause an economic contraction in the second half of fiscal 2016. To prevent that, the government will devise economic stimulus measures, the officials said.

Expected stimulus measures include ones to address nursery school shortages and other urgent problems that would be featured in the government’s upcoming Plan to Realize the Dynamic Engagement of All Citizens, to be released in May.

An idea has also been floated that shopping vouchers with expiry dates will be issued to voters for multiple fiscal years to jack up personal consumption over a considerable period.

To finance the envisioned stimulus measures, the government will aim to draft a supplementary budget for fiscal 2016 and submit it to the Diet during the anticipated extraordinary session in autumn, the officials said.

Abe’s economic adviser, Etsuro Honda, has proposed at least ¥5 trillion in fiscal spending for additional economic stimulus. Some ruling lawmakers are expected to request even bigger spending.

  • thedudeabidez

    “,To -finance the envisioned stimulus measures, the government will aim to draft a supplementary budget for fiscal 2016 ”

    But where this ¥5 trillion will come from remains unstated. The LDP continues to spend the consumption tax money faster than they can collect in these “supplemental budgets”, despite the repeated promises that the consumption tax was slated to go solely to the social welfare budget.

  • thedudeabidez

    “,To -finance the envisioned stimulus measures, the government will aim to draft a supplementary budget for fiscal 2016 ”

    But where this ¥5 trillion will come from remains unstated. The LDP continues to spend the consumption tax money faster than they can collect in these “supplemental budgets”, despite the repeated promises that the consumption tax was slated to go solely to the social welfare budget.