Published: 2025-11-17T03:00:02.000Z

Japan: Money Begins to Pour

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Japan Pm Takaichi began her stimulus plan

Long awaited, the new Japan PM Takaichi is finally rolling out her stimulus package. It is reported that the stimulus package focusing on cost relief and key investment will be around 110 billion USD, exceeding the 60 billion estimate in late October. While exceeding early estimates, it is not that different from the stimulus size in 2023/24 and only a quarter of COVID era stimulus. Takaichi has been viewed as pro-stimulus since her election and this stimulus plan seems to be true with her words in providing cost relief for Japanese residents and increase investment in strategic area such as AI and chips.

Details will not be revealed until Friday but could see similar measures being rolled out with a twist. Cost relief will likely be twofold. For Japanese residents, they could see income and residential tax and energy rebates with one-off stimulus check less likely. For Japanese business, we feel more stimulus will be targeted at SMEs for they are the ones having difficulties in catching up wage growth against large enterprise. The package could include one off grants for SMEs, to encourage their transition in price/wage setting behavior. 

Despite short term cost relief could be helpful, strategic investments will take years to yield and in the mean time the financial picture will worsen from Japan. There is unlikely sufficient supplementary budget to fund this package and would require Japan issuing new bond. The trillions of new bond will worsen the debt to GDP for Japan, affecting investor confident. PM Takaichi has vowed to exert a level of fiscal restrain and we will have to wait and see how she can interpret the inevitable worsening fiscal picture. We expect her to downplay short term impact and convert to multi-year fiscal balance, in hopes of reinforcing confident. Another area that she will have to deal with, is the continual fall in JPY, which in turn increases cost of living. We doubt such will be addressed in the details on Friday.

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