Japan Leans on Fiscal Stimulus to Keep Recession at Bay
Comment of the Day

December 05 2019

Commentary by Eoin Treacy

Japan Leans on Fiscal Stimulus to Keep Recession at Bay

This article by Toru Fujioka, Yoshiaki Nohara and Takashi Hirokawa for Bloomberg may be of interest to subscribers. Here is a section:

“In any country, the positive impact of extra monetary stimulus is limited, which is especially true in Japan and Europe where rates have turned negative. You have no effective choice but to execute fiscal measures to support growth,” said Harumi Taguchi, Tokyo-based principal economist at IHS Markit.

Earlier in the day, Abe described the stimulus as a three-pillared package designed to aid disaster relief, protect against downside economic risks and prepare the country for longer-term growth after the 2020 Tokyo Olympics.

He said the stimulus would be funded by a supplementary budget for the current fiscal year ending in March, and special measures in the following year. The package outlines 4.3 trillion yen in funding for the measures in an extra budget this fiscal year.

Eoin Treacy's view

This stimulus helps to unwind some of the negative impact from the sales tax hike earlier in the quarter and is a further iteration of the global surge in fiscal stimulus as the expected positive growth effects of quantitative easing failed to materialise.

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