Japan's government Wednesday announced a stimulus package worth more than 28 trillion yen ($266 billion) in its latest attempt to fire up the lukewarm economy, with the central bank expected to unveil its own measures this week.
Policymakers are under pressure to boost growth as Prime Minister Shinzo Abe's 'Abenomics' plan to kickstart the world's number three economy comes under threat from poor data and sagging business confidence.
Abe confirmed the new plan Wednesday but gave few details, except to say about half the total would be fiscal measures including government spending. Cheap loans could also be part of the package.
More details are expected next week when the cabinet meets to approve the measures.
The move is a response to Britain's vote last month to quit the European Union. The decision sparked a rally in the safe-haven yen currency that threatened profits at Japan Inc and fanned fears about the already weak economy.
Traders buy Japan's currency as a safe bet in times of turmoil or uncertainty. But it makes exporters less competitive overseas and takes a bite out of their bottom line.
The stimulus news on Wednesday briefly pushed the yen into a dive, giving Tokyo stocks a boost.
Our package "has to be something that will support domestic growth and ensure there is a path to a recovery in the economy", Abe said.
However, analysts generally gave a thumbs down to the plan, with some suggesting that actual new spending may only comprise a fraction of the total.
"This is not a very meaningful number," Martin Schulz, senior research fellow at the Fujitsu Research Institute in Tokyo, said of the whopping 28 trillion yen figure.
"It adds up all sorts of existing and additional incentives and credit guarantees for infrastructure programs that stretch out over years and do not result in immediate spending."
- 'Abenomics engine' -
The package would do little to advance Abe's longer-term goals such as bringing more women into the workforce, said Satoshi Osanai, senior economist at Daiwa Securities.
"Abe pledged to 'rev up the Abenomics engine to the maximum' but this stimulus won't be enough for that," Osanai said.
The news comes as speculation mounts that the Bank of Japan will further ease monetary policy after a two-day meeting ends Friday.
Among the possible measures, the central bank could expand its mammoth bond-buying plan, a cornerstone of Abe's push to end years of deflation and kickstart growth.
It might also cut interest rates further into negative territory, as it tries to boost lending to people and businesses.
But the BoJ's fledgling negative rate policy, launched in January, was widely criticised as a desperate move to prop up Abe's failing growth plans.
The programme effectively charges commercial banks for keeping excess reserves in the BoJ's vaults, giving them an incentive to lend more.
On Friday Japan is due to release monthly economic data that could influence the BoJ's decision.
The last figures painted a worrying picture, with household spending falling and inflation dropping for a third straight month.
Abe's government has delayed a consumption tax increase after an earlier rise pushed the country into a brief recession.
While the labour market remains tight, there are growing concerns about second-quarter economic growth. Japan dodged a recession in the first three months of the year.
The Bank of Japan's most recent Tankan survey showed confidence among small firms and non-manufacturers worsened during the second quarter.
Abe's package comes about two weeks after he claimed victory for his ruling coalition in parliamentary elections, despite lukewarm public support for his economic policies.
His blueprint -- a mix of massive monetary easing, government spending and red-tape slashing -- had brought the yen down from record highs and made Japan's exports more competitive. But that has not been enough to deliver consistent growth.
AFP
Wed Jul 27 2016
Japan's prime minister on July 27 announced a whopping stimulus package worth more than 28 trillion yen (266 billion USD) aimed squarely at boosting the wobbly economy. - Photo AP
Kagame, menang 99.5 peratus pilihan raya Rwanda
Paul Kagame meneruskan khidmatnya buat penggal keempat berturut-turut sebagai Presiden Rwanda, selepas memenangi 99.15 peratus undi dalam pilihan raya negara itu.
Polis kerah lebih 300 anggota kawal perlawanan Piala FA
Seramai 351 anggota polis ditugaskan bagi mengawal perlawanan separuh akhir Piala FA antara Terengganu FC (TFC) dengan Selangor FC di Stadium Sultan Mizan Zainal Abidin (SSMZA) Jumaat ini.
Dua warga AS antara yang ditemui maut di bilik hotel di Thailand
Jabatan Negara Amerika Syarikat ambil maklum mengenai laporan mengenai dua warganegaranya yang ditemui mati di sebuah hotel di Thailand.
EU tolak label UNRWA sebagai organisasi pengganas
Ketua Dasar Luar Kesatuan Eropah (EU), Josep Borrell mengulangi penolakan blok itu melabel Agensi Bantuan dan Kerja Bangsa-Bangsa Bersatu untuk Pelarian Palestin (UNRWA) sebagai organisasi pengganas.
Mengimbau sedekad tragedi MH17
Pesawat MH17 Malaysia Airlines ditembak jatuh di timur Ukraine sejurus berlepas dari Lapangan Terbang Schiphol di Amsterdam, mengorbankan kesemua 283 penumpang dan 15 anak kapal di dalamnya.
Tragedi yang berlaku pada 17 Julai 2014 itu, kini memasuki tahun ke-10 kejadiannya.
Tragedi yang berlaku pada 17 Julai 2014 itu, kini memasuki tahun ke-10 kejadiannya.
Kerajaan teliti kaedah baharu lantikan tetap, pastikan kewangan negara lebih mampan
Kerajaan sedang meneliti kaedah baharu lantikan tetap bagi memastikan pengurusan kewangan negara yang lebih mampan.
PDRM gerak unit skuba forensik, K9 cari telefon, rantai Nur Farah Kartini hari ini
Proses mencari bahan bukti akan dimulakan sekitar jam 9 pagi di kawasan parit berhampiran ladang kelapa sawit berkenaan.
Bangkai pesawat MH17 tanpa sayap imbau kekejaman tragedi menyayat hati
Keadaan serpihan pesawat MH17 Malaysia Airlines (MAS) yang cuba dibina semula tanpa sayap, tayar, ekor dan tempat duduk penumpang cukup menggerunkan sekali gus mengingatkan pada kekejaman yang meragut
VOP akan diselesaikan dalam tempoh sebulan - Ahmad
Pelaksanaan Syarat Perubahan Harga (VOP) susulan penyasaran subsidi diesel dijangka diselesaikan dalam tempoh sebulan lagi, kata Timbalan Menteri Kerja Raya Datuk Seri Ahmad Maslan.
Industri minyak sawit disaran guna semula sisa untuk bahan api penerbangan mampan - Liew
Industri minyak sawit perlu mengkaji penggunaan semula sisa sebagai stok suapan penting untuk bahan api penerbangan mampan (SAF), di luar penggunaan tradisional minyak sawit.
Menteri Luar adakan lawatan rasmi ke China esok
Menteri Luar , Datuk Seri Hishammuddin Tun Hussein akan mengadakan lawatan rasmi ke China dari 1 hingga 2 April 2021.
Beware of the Fitch rating that can hurl Malaysia into a ditch
Credit rating agencies cannot be trusted, as the key navigator to steer the macro or micro economy of Malaysia, says Dr Rais.
Kaji selidik Monash: Pemimpin korporat Cina puas hati dengan PH
Dalam kaji selidik yang melibatkan 390 responden itu, 50 peratus pemimpin korporat Cina berpuas hati, diikuti pemimpin Melayu (39 peratus), dan pemimpin India (38 peratus).
MAS tawar diskaun tiket sehingga 50 peratus bermula hari ini
Syarikat penerbangan Malaysia Airlines kini menawarkan potongan diskaun bagi kadar tambang sehingga 50 peratus bermula hari ini sehingga sehingga 8 Mei depan.