In the second quarter of 2020, Japan’s economy had gone down, and it faced the worst ever economic contraction since the time it had stabilized after the war. This time, the economic decline was noted to be around 8.2%.
However, the economy surged by 5.3% in the third quarter of 2020. But because of another wave that caused a resurgence of COVID-19 cases, this economic spike may not have a very significant impact. The increasing number of COVID cases will eventually diminish the effect of this spike and will affect consumer spending. Similarly, if the surge in COVID cases leads to voluntary closures of businesses, that will also hurt the spending.
The Japanese Prime Minister Yoshihide Suga has recently announced a stimulus of around 73.6 trillion Yen, which is almost equal to $708 billion in the hopes of providing additional support to his country to bounce back from the economic crisis that has been induced by the coronavirus pandemic.
$384 Billion From Stimulus Fund Will Come From Direct Spending
The new stimulus package will include fiscal spending in the form of direct spending, loans, and investments. This fiscal spending will worth around 40 trillion Yen or $384 bn.
Apart from this, the stimulus package will also include extensions for subsidy programs that will be directed towards domestic traveling companies and spurring consumption. The thing is that if the government tries to boost consumer spending, it will land them in murky waters. Prime Minister Suga has previously been criticized for his strong defense towards a popular travel subsidy program, Go to Travel which was launched in July, and Suga believed it to be one of his most effective stimulus policies. However, this subsidy program was ostracized for causing an increase in the spread of COVID-19. Despite its uncertainty, Prime Minister Suga has announced an additional 1.35 trillion Yen for the subsidy of this program.
The government has also announced some special measures for the companies that have had to lay off their employees and now are suffering because of the laborer slack.
Prime Minister Suga has also announced to increase subsidies to aid local governments to combat the adverse effects of the pandemic that the restaurants and bars suffered. The food and drinks business suffered a lot due to the pandemic because they had to close down for a couple of months, and if they continued to operate, they had to cut down their timings and most of the restaurants had to shut down their dining areas and only rely on delivery services. So, the Japanese government is trying to provide support to these businesses also along with the governments that have had to face the economic decline in return too. Around $14.4 billion will be used for this fund.
The Japanese government is also aiming to provide financial stimulus to medical and healthcare institutions too so that better healthcare could be provided to the COVID-19 affected people.
Around $19.2 billion will be utilized for the climatic changes and carbon neutrality that Japan is aiming to achieve by 2050. And almost $9.6 billion will be utilized to promote digitalization.
Stimulus Package Breakdown
Out of the 40 trillion Yen, almost around ¥5.9 trillion will be utilized in measures for virus containment.
Around ¥ 18.4 trillion will be used to aid all the infrastructural changes that will be required for the growth of the economy once the pandemic is over.
Around ¥ 5.6 trillion is going to be utilized for the management of disasters and to cover the recovery cost.
In the year 2020, the Japanese government already announced two stimulus packages worth a total of $2.2 trillion.
Those relief packages included cash payments and loans for small and medium-sized businesses and households. With this new package, the overall stimulus from the Japanese government will reach around $3 trillion.
I’m Ava Paul, an experienced news website author with a special focus on the entertainment section. Over the past five years, I have worked in various positions of media and communication at World Stock Market. My experience has given me extensive knowledge in writing, editing, researching and reporting on stories related to the entertainment industry.
