Japan Plans Bold Spending Increase in New Economic Stimulus
Japan’s government is preparing to significantly boost spending to support an economy that is finally showing signs of recovery from years of stagnation, according to a draft of Prime Minister Sanae Takaichi’s stimulus package reviewed by Reuters on Wednesday.
The draft pledges to invest “boldly and without hesitation” in measures aimed at crisis management and long-term growth, suggesting the final plan will feature substantial fiscal spending. While the document does not specify an exact amount, analysts expect the scale to be among Japan’s largest in recent years.
The government describes the current economic phase as a transition period from one “prone to deflation and cost-cutting” to a more sustainable, growth-oriented environment. To accelerate this shift, the package will include subsidies to reduce utility and gasoline costs, aid for businesses affected by higher U.S. tariffs, and a likely increase in defense spending.
In addition, the plan prioritizes strategic investments in key industries such as artificial intelligence (AI), semiconductors, and shipbuilding, reinforcing Japan’s efforts to strengthen its position in critical global supply chains.
The Takaichi administration is expected to finalize the package later this month, alongside a supplementary budget for the current fiscal year to finance part of the new spending. Analysts at Daiwa Securities project that extra-budgetary spending could reach up to 20 trillion yen ($133 billion), underscoring the government’s strong commitment to fiscal support as economic recovery gains momentum.
