Abe approves $182 billion package to pull Japan out of deflation

5 years ago by in Politics

On Thursday, Shinzo Abe’s cabinet voted for a $182 billion package to shrink the deflation in Japan. However, there are doubts regarding how efficient the effects will be, according to the international media.

The package has a headline value of Y18.6 trillion yen ($182 billion), which is an exaggerated figure as the bulk of the package includes loans from government-backed lenders and spending by local governments that was already scheduled.

“Market participants want the government to focus even more energy on economic policy,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

“Some of these items, like reconstruction from the earthquake, were already scheduled and do not really constitute an economic strategy,” he added, according to the press.

The Cabinet Office says the new measures will create around 250,000 jobs.

The steps approved on Thursday include measures to boost competitiveness; assist women, youth and the elderly; accelerate reconstruction from the March 2011 earthquake and tsunami; and build infrastructure for the 2020 Tokyo Olympics.

“This includes steps to boost capital expenditure for the future and ensure the economy stays in a positive cycle,” Abe said. “If companies invest more and wages rise more, then the positive (economic) cycle materializes,” he added.