The prime minister of Japan, Shinzo Abe plans to propose an additional stimulus package after warning Group of Seven nations that the global economy is at risk of another crisis, according to the Nikkei newspaper.
Abe will seek a second supplementary budget worth 5 trillion yen to 10 trillion yen after July’s upper-house election, the Nikkei reported Saturday without attribution. Proposals will include accelerating the construction of a magnetic-levitation train line from Nagoya to Osaka, issuing vouchers to boost consumer spending, increasing pay for child-care workers and setting up a scholarship fund, the Nikkei said.
“When you want to get the economy going, as long as demand in Asia is weak, you need additional public spending,” Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo, said by phone. “Since private spending is still not picking up, the government is simply taking up the slack.”
Abe is getting closer to delaying an increase in Japan’s sales tax, saying Friday he’ll make a decision before an upper-house election this summer on whether to go ahead with a planned hike in the levy next April to 10 percent, from 8 percent. A formal announcement of a two-year delay is expected Wednesday at the close of the parliamentary session, the Nikkei reported. A Japan government official declined to comment Saturday.
The stimulus package would be the second this fiscal year after Japan approved a 778 billion yen supplementary budget this month to aid recovery from earthquakes in the Kumamoto region.
The G-7 industrial nations will use “all policy tools — monetary, fiscal and structural — individually and collectively to strengthen global demand and address supply constraints while continuing our efforts to put debt on a sustainable path,” the group said in a statement Friday after a two-day summit in central Japan. Abe failed in his bid to have his warning of a global crisis included in the communique.