Japan unveils US$ 116 billion stimulus package

Newly-elected Japanese Prime Minister Shinzo Abe has approved a JPY 10 trillion (US$ 116 billion) stimulus package that aims to lift the country’s economy out of its fifth recession in 15 years.

The package outlines three priority areas for funding, with reconstruction and disaster prevention receiving the largest sum of JPY 3.8 trillion (US$ 43 billion).

This money will go towards re-building the Tohoku area devastated by the earthquake and tsunami of March 11, 2011, as well as measures designed to protect Japan from future disasters.

The second priority area of funding is the creation of wealth through growth. JPY 3.1 trillion (US$ 35 billion) will be allocated to measures designed to improve the competitiveness of Japanese industry. This will also include construction projects such as repairing ageing roads and school buildings

The third priority area will see JPY 3.1 trillion (US$ 35 billion) go towards social security such as healthcare and education as well as regional revitalisation.

The Japanese government expects the stimulus to raise real economic growth by 2 percentage points and create 600,000 jobs.

Mr Abe, who came to power at the end of 2012, said the plan was based in, “the three arrows of a bold monetary policy, flexible fiscal policy and a growth strategy to stimulate private investment.”

Indeed, JPY 1.8 trillion (US$ 20 billion) from the stimulus package will be put towards measures to encourage more private investment.

Mr Abe expressed gratitude to the Japanese Government Council for compiling the measures despite a very short period after the inauguration of the new administration, and highlighted the “sense of mission that we must revive the Japanese economy.”