Japan PM Abe Announces Massive $266 Bln Stimulus For Economy
27 July 2016 - 6:44PM
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Japanese Prime Minister Shinzo Abe on Wednesday said his
government is set to unveil a stimulus package of more than 28
trillion yen ($266 billion) to boost the sluggish economy that is
witnessing fragile growth and hardly any inflation.
Meanwhile, the Bank of Japan is set to begin its two-day policy
session on Thursday, following which the bank is widely expected to
announce further monetary easing on Friday.
Abe made the announcement in a speech in southwestern Japan and
said that the package would include 13 trillion yen in fiscal
measures. More details of the plan would be revealed next week.
Japanese stock markets rose on the news, while the yen, a
safe-haven during turbulent times, dived.
The more than 28 trillion yen stimulus equals nearly 6 percent
of the GDP and economists are treating such a huge figure with
caution, saying that actual spending may be much less.
"The absence of a major crisis at the moment already raises some
question marks on whether policymakers really will press ahead with
such large amounts of spending," Capital Economics economist Marcel
Thieliant said.
"Today's announcement reduces the chances of further monetary
stimulus being introduced this week but we still think it more
likely than not," the economist added.
The package aims to support domestic demand and put the economy
on a recovery path, Abe said.
Expectations that the government was set to announce an economic
stimulus surfaced earlier this month, as Abe tries to refresh his
"Abenomics" policies to boost the economy. Markets were widely
expecting a package of over 10 trillion yen.
In June, the Abe administration postponed a consumption tax hike
scheduled for next April over fears that it would derail efforts to
boost prices.
It was the second time that the proposed sales tax hike was
postponed. The 8 percent sales tax rate was originally scheduled to
be hiked to 10 percent last October.
Previously, the rate was boosted by three percentage points in
April 2014, which was the first such hike in 17 years.
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