The Japanese government unveiled a new economic spending package to the tune of $270 billion, in a desperate effort to uphold the country’s currency and support a weakening economy thanks to surging inflation.
The package, announced late last week, earmarks funds for both local and central governments, with the intention of “overcoming rising prices and reviving the economy… to protect people’s livelihoods and businesses,” said Prime Minister Fumio Kishida, as cited by Japanese news agency NHK World Japan. In addition to the unprecedented spending spree, the government also promised to lower utility bills for struggling households, which is expected to reduce their costs electricity and natural gas costs by $19 and $6, respectively, each month.
Inflation in Japan has soared to the highest in over 40 years, with core consumer prices skyrocketing 3.4% year-over-year in October. The jump in prices has largely been attributed to rising energy, food, and raw material costs, mostly due to the conflict in Ukraine. The yen slumped to the lowest level against the US dollar since 1990, losing over one-fifth of its value since the beginning of the year. Meanwhile, the Bank of Japan has been going against the global status quo of increasing interest rates to combat inflation, instead opting to keep short-term borrowing costs at -0.1%.
Information for this briefing was found via Kyodo News and NHK World Japan. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.