Tokyo, July 27 (IANS) Japanese Prime Minister Shinzo Abe on Wednesday announced a stimulus package of more than 28 trillion yen (about $266 billion) to shore-up Japan’s economy that has been flagging despite various instalments of economic policies over the years.
“We need to take steps to support domestic demand and put the economy on a firmer recovery path,” Xinhua news agency quoted the Prime Minister as saying at a speech in Fukuoka, Japan.
“I want to use various measures to increase our escape velocity from deflation,” Xinhua news agency quoted him as saying.
“We’ll compile the stimulus package next week, focusing on investment in future growth and taking a significant step toward a new agricultural policy,” the Prime Minister added.
Abe’s cabinet will formally approve the budget on July 2.
The government’s bold spending measures will increase pressure on the Bank of Japan (BOJ), an official said.
After the upper house election won by Abe’s ruling Liberal Democratic Party-led coalition, largely seen as a referendum for Abe to garner more support and time from the public to see his latest “Abenomics” agenda.
The government has previously said it plans to boost spending on high growth sectors including infrastructure building, farm exports as well as tourism, which has been booming of late owing to the increasing purchasing power of visitors coming here when the yen declines.
A strong yen is not welcomed by the government here because Japan, as an export nation, relies on a comparatively weak yen to ensure that its overseas profits are boosted when repatriated on favourable exchange rates and that Japanese goods remain competitive against their counterparts in international markets.
But the yen’s rise has erased billions of yen worth of profits and led to substantial downward reviews. A strong yen also weighs heavily on the stock market, which has also seen increased volatility since the “Brexit” vote.