"The scale of this budget suggests that Abe's new administration is serious about stimulating the economy"
- Masamichi Adachi, a senior economist at JPMorgan Securities
Japanese government, led by Shinzo Abe, is expected to announce around 12 trillion yen ($136 billion) in fiscal stimulus measures in order to boost flagging economy. Around the half of the stimulus will be aimed at public works projects and the launch is planned this week. The spending will likely help to accelerate a recovery from recession, as Abe pledged his readiness to boost growth and end deflation in the world's third-largest economy by any means necessary. In order to collect the required cash, about 8-9 trillion in extra bond issuance will be required.
"The scale of this budget suggests that Abe's new administration is serious about stimulating the economy," said Masamichi Adachi, a senior economist at JPMorgan Securities in Tokyo and a former central bank official. "It'll be very helpful in the near-time, but the problem in the medium-to-long term is that we have to pay this back."
"There are some bright spots here and there, but overall, the economy remains weak and we can't be optimistic," a Cabinet Office official in charge of compiling the report said in a cautious assessment of the world's third-largest economy.
© Dukascopy Bank SA