On Friday, the Japanese government agreed to spend $ 490 billion on stimulus measures, a move by Japan’s new prime minister to stimulate an economy hit by coronavirus-related restrictions and supply chain disruptions that have affected the country’s largest manufacturers.
Prime Minister Fumio Kishida’s cabinet approved a 56 trillion yen stimulus package on Friday, less than two months after he won a second round of elections to lead the country’s ruling Liberal Democratic Party. Japan’s economy ranks third in the world after the United States and China.
The stimulus package is the largest in Japan to date, accounting for about 10 percent of its gross domestic product, officials said. Mr Kishida said on Friday that this could increase GDP by about 5.6 percent.
“I want to put Japan’s economy, which has been badly hit, on a recovery trajectory,” he told reporters Friday afternoon.
The package includes assistance to troubled businesses and hospitals, money to strengthen semiconductor supply chains, as well as programs to encourage domestic tourism and investment in a nationwide university endowment fund.
It also includes a lump sum payment of ¥ 100,000, or $ 878, per child under 18 for households where the highest paid parent earns less than $ 84,300 per year. About nine out of ten households with children are eligible to participate.
Giving money to young families is not very popular. Critics question the need for them in a country with an aging society.
Last spring, the government sent stimulus checks for 100,000 yen to each resident, but they did little to boost inflation or consumer spending. Analysts estimate that about 70 percent of the giveaways went to household savings.
Earlier this month, Japan announced a partial easing of border restrictions and has already lifted almost all restrictions on its economy amid falling cases of the virus. The rate of fully vaccinated people – 76 percent of the population, according to the New York Times tracker – is also one of the highest among wealthy countries.
But the ban on foreign tourists continues to weigh on economic growth.