17/02/2020 Japan unveils $162.

Japan unveils $162.5b fiscal stimulus to support growth, Economy News & Top Stories - The Straits Times

THE STRAITS TIMES

Japan unveils $162.5b fiscal stimulus to

support growth

Japan's cabinet approved a $162.5 billion fiscal package on Thursday to support stalling growth in the
world's third-largest economy.

 PUBLISHED DEC 6, 2019, 5:00 AM SGT

Package announced by Abe aims to combat offshore risks and sustain economic
activity

TOKYO • Japan unveiled a 13 trillion yen (S$162.5 billion) fiscal package yesterday to support stalling
growth in the world's third-largest economy amid offshore risks, and as policymakers look to sustain
activity beyond next year's Tokyo Olympics.

Prime Minister Shinzo Abe announced the package, the size of which had been reported previously. The
government was expected to announce further details of the package later in the day after the Cabinet had
approved it.

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17/02/2020 Japan unveils $162.5b fiscal stimulus to support growth, Economy News & Top Stories - The Straits Times

"We managed to compile a strong policy package," Mr Abe told a gathering of ruling party lawmakers and
government officials yesterday.

"It's based on three pillars of ensuring disaster rebuilding and safety, providing intensive support to
overcome downside economic risks and sustaining economic vitality after the Tokyo Olympics," he added.

The entire economic package amounts to 25 trillion yen when government loans, credit guarantees and
private-sector spending are included, sources told Reuters this week.

Japan's economy ground to a near halt from July to September as the global slowdown knocked exports.
Retail sales also tumbled at their fastest pace in more than 4½ years in October as a sales tax hike
prompted shoppers to tighten their purse strings.

"Fiscal policy is a smart thing to do right now, particularly because there really isn't much opportunity for
any monetary policy movement given that there just isn't any space on the monetary policy side," said
Moody's Analytics economist Steve Cochrane before Mr Abe's announcement.

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"If it's infrastructure spending, or spending on education and training for either young people or retraining
the older generation that is staying in the labour force longer - these are activities that would provide near-
term juice for the economy, but maybe have long-term impact as well," Dr Cochrane added.

THREE PILLARS

It's based on three pillars of ensuring disaster rebuilding and safety, providing
intensive support to overcome downside economic risks and sustaining economic
vitality after the Tokyo Olympics.


JAPANESE PRIME MINISTER SHINZO ABE, on the policy package.

In compiling the package, Japan's heavily indebted government will tap stretched fiscal space to combat
overseas risks and the impact of the sales tax hike.

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17/02/2020 Japan unveils $162.5b fiscal stimulus to support growth, Economy News & Top Stories - The Straits Times

The 13 trillion yen includes more than three trillion yen from fiscal investment and loan programmes, as the
government seeks to take advantage of low borrowing costs under the central bank's negative interest rate
policy.

The spending will spread over a supplementary budget for this fiscal year to next March, and an annual
budget for the coming fiscal year from next April, both to be compiled later this month.

"Rather than pushing up the economy, we see it as easing negative factors," said Shinkin Central Bank
Research Institute senior economist Takumi Tsunoda.

The stimulus package is smaller than the last major package compiled in 2016, worth 28 trillion yen, when
the Brexit vote darkened Japan's export outlook.

To strike a balance between spurring growth and maintaining fiscal discipline, Tokyo will steer clear of fresh
deficit-covering bond issuance, the Nikkei business daily reported this week.

REUTERS

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