Japan unveils ambitious ¥10.3 trillion stimulus package

Stimulus aimed at galvanizing the recession-hit economy.

BBVA noted that, as anticipated, Prime Minister Shinzo Abe announced a ¥10.3trn yen (USD $116 billion, or 2.2% of GDP) stimulus package as his new government seeks to end deflation and jump-start Japan’s sluggish economy.

The government also called on the Bank of Japan to conduct more aggressive monetary easing, and to adopt a 2% inflation target (from an informal 1% “goal” at present).

"Japan's economy has fallen into recession since the second quarter of 2012. The government estimates that today’s package will boost GDP growth by 2% and create 600k jobs. An additional ¥5 trillion yen in bonds will be issued to finance the stimulus package, which will add to the already high public debt level, currently around 230% of GDP. Markets were boosted by today’s announcement, as the Nikkei gained 1.4% percent, and the yen weakened further to 89.9, its lowest level in 2½ years," said BBVA.