Japan passes $250B economic package meant to lift wages and spur growth

TOKYO: Japan approved a 39 trillion yen ($250 billion) economic stimulus package Friday centred around initiatives it said were aimed at boosting individual incomes.

The broad plan passed by the Cabinet is the centrepiece of Prime Minister Shigeru Ishiba’s recently installed administration. It provides support for digital innovation in the world’s fourth largest economy, subsidies to defray for rising energy costs and help for low-income households.

The plan is designed to instill a sense of “well being” in the Japanese people, the government said, using the English phrase.

Although Japan has managed weak growth in recent quarters, the long-term outlook for the economy and for the country’s standing in the world is uncertain.

The plan includes measures to address the country’s falling birthrate, which is one of the lowest among developed nations, help for working women and for the elderly.

The plan proposes raising the tax-free salary threshold from 1.03 million yen ($6,640), potentially to 1.78 million yen ($11,500). The Ministry of Economy, Trade and Industry highlighted Japan’s recovery from deflation, natural disasters, and the pandemic. The government stresses sustainable wage increases to prevent a deflationary spiral and foster growth.

Support is pledged for small businesses, regional economies, farms, and creative industries. After losing their lower house majority, the ruling Liberal Democratic Party and coalition face challenges securing opposition backing, with analysts predicting a potentially brief premiership

for Ishiba.