Japanese Prime Minister Sanae Takaichi assured that the 21,300 billion yen (117 billion euro) recovery plan, approved on Friday 21 November when inflation was high, was ” responsible “ from a budgetary point of view, confirming that he intends to reduce the country’s huge debt. With these steps, the government aims to revive growth in the world’s fourth-largest economy in the context of Japanese public frustration with soaring prices.
mI Takaichi came to power last month on a promise to fight inflation, after anger over inflation contributed to the downfall of his predecessor, Shigeru Ishiba, who was in office for barely a year. But inflation rose again in the country in October according to figures published on Friday, rising to 3% excluding fresh produce, compared with 2.9% in September.
Therefore, the increase in consumer prices in the archipelago does not meet the Bank of Japan’s goal (2%) for 43e consecutive months, an unprecedented run since 1992, and could prompt the agency to raise interest rates in December.
However, the government’s sweeping plans are expected to further increase the country’s pharaonic debt, which is expected to reach 232.7% of GDP by 2025, according to the International Monetary Fund (IMF). Concerns about Japan’s financial health sent government bond yields hitting record highs this week.
“A proactive and responsible fiscal policy means a forward-looking strategy, which does not aim to seek scale in an unwise or excessive manner”M said.I Takaichi. “By strictly applying the principles of prudent spending, we will implement budgetary measures strategically to protect the lives of our citizens and build a strong economy”he added.
“By encouraging a strong economy and increasing the growth rate, we will reduce the debt-to-GDP ratio, achieve fiscal sustainability and guarantee market confidence”he promised again. The package of measures planned by the Prime Minister includes subsidies to help pay energy bills and tax cuts to reduce the impact of inflation on households.
Concerns about the Japanese currency
“Japan has implemented expansionary economic policies for so long without being able to stimulate the economy”estimated Margarita Estevez-Abe, an analyst at the Maxwell School at Syracuse University.
The archipelago’s gross domestic product contracted slightly by 0.4% in the third quarter, according to figures published earlier in the week. These concerns also weighed on the Japanese currency, which has fallen to its lowest level against the dollar since January. “Further yen depreciation will hit ordinary Japanese households with higher prices”M’s noteI Estevez-Abe.
Finance Minister Satsuki Katayama suggested more clearly than ever on Friday that the government could intervene to support its currency, saying Japan would take further action. “the right steps towards the movement (currency exchange) irregular “according to several media. Japan’s last state intervention to support the yen occurred in July 2024.
Japan’s economy is also threatened by tightening tensions between Tokyo and Beijing, following comments from Mr.I Takaichi argued that an armed attack on Taiwan could justify sending Japanese troops to defend the island – over which China claims sovereignty.
Beijing summoned Japan’s ambassador and advised its citizens to avoid travel to the islands, where the Chinese are the biggest source of foreign tourists. Media reports also reported this week that China would suspend imports of Japanese seafood, although this has not been officially confirmed.
Friday, MI Takaichi said Tokyo’s position towards Taiwan remained the same “do not change” and that he wants a relationship “constructive and stable” with Beijing.
The US State Department also stated that Washington’s commitment to the US-Japan alliance and the defense of Japan, including the Senkaku Islands administered by Tokyo but claimed by China, is incorrect. “immovable”. These uninhabited islands, which China calls Diaoyu, are a frequent source of tension, and Beijing deployed a coast guard ship nearby on Sunday.
“We firmly oppose any unilateral attempt to change the status quo, including by force or coercion, in the Taiwan Strait, East China Sea, or South China Sea”State Department spokesman Tommy Pigott told X.
