Japan’s output gap of about ¥20 trillion ($145 billion) should be borne in mind in discussions about a second extra budget expected to start in the fall, a former economy minister said.

"In the parliamentary session starting from the fall, I would like to think about large-scale economic stimulus and an extra budget,” said Yasutoshi Nishimura, who now serves on a ruling Liberal Democratic Party panel on economic growth. He added that some of the funds could be spent on the government’s plans for digitalization and "green transformation.”

The so-called gross domestic product gap, or output gap, refers to the difference between a country’s actual output and the output it could potentially reach at full capacity. An estimate released by the Cabinet Office last month for the January-March period put the figure at negative 3.6%, or about ¥20 trillion.

Prime Minister Fumio Kishida has so far said he will focus for now on using reserves of up to ¥5.5 trillion from previous budgets to support an economy struggling with the lingering effects of the pandemic, as well as fuel and food price rises, amid a slump in the yen not seen for decades.

But media polls show voters are dissatisfied with the measures Kishida has taken to tackle inflation, and he has said he will think about another budget depending on the circumstances.

"Private sector demand is still low, so we need government spending to stimulate it,” Nishimura said in an interview on Friday. "We will monitor the situation while thinking about the scale.”

A group of young LDP lawmakers has called for an extra budget of ¥50 trillion, to be spent on items including cash handouts for individuals and bolstering Japan’s defenses, the Sankei Shimbun reported on July 20.

Speaking a day after the Bank of Japan decided to keep its ultraeasy policy unchanged, despite inflation partly fueled by the yen’s nosedive, Nishimura said he agreed with the decision and that the burden on households from inflation could be tackled through fiscal policy.

Over the past few days, Tokyo has reported the highest levels of daily COVID-19 infections since the start of the pandemic. While the number of serious illnesses and deaths remains relatively low, and no restrictions have been introduced on people’s movements, the rapid spread of the virus is likely to weigh on the economy.

Japan’s government is set to cut its growth outlook for the fiscal year ending next March to about 2% from 3.2% in January, the Nikkei newspaper reported on Friday.