Business

Japan plans $163 billion economic stimulus package

TOKYO: Japan is preparing an economic stimulus package worth US$120 billion (S$163 billion) to support fragile growth, two government officials with direct knowledge of the matter said yesterday, complicating government efforts to fix public finances.

The spending would be earmarked in a supplementary budget for this fiscal year to next March and an annual budget for the coming fiscal year from April. Both budgets will be compiled later this month, the sources told Reuters, declining to be identified.

The package would come to around 13 trillion yen (S$163 billion), but that would rise to 25 trillion yen when private-sector and other spending are included.

The Nikkei business daily reported the government was considering putting together a large-scale stimulus package with fiscal spending exceeding US$92 billion.

Japan's economic growth slumped to its weakest in a year in the third quarter as soft global demand and the Sino-US trade war hit exports, stoking fears of a recession.

Some analysts also worry that a sales tax hike to 10 per cent in October could cool private consumption which has helped cushion weak exports.

Such spending could strain Japan's coffers - the industrial world's heaviest public debt burden, which tops more than twice the size of its US$5 trillion economy.

Despite the headline size of the stimulus, actual spending would be smaller in the current fiscal year, and economists are not expecting much of a boost.

"We expect this fiscal year's extra budget to total around 3-4 trillion yen. We should not expect it to substantially push up the GDP growth rate," said senior economist at Dai-ichi Life Research Institute Takuya Hoshino. - REUTERS

BUSINESS & FINANCE