Japanese PM Orders Stimulus Measures to Fight Deflation

Prime Minister Shinzo Abe ordered his ministers Tuesday to compile economic stimulus measures to overcome deflation as a slowdown in emerging economies and the yen’s appreciation threaten Japan’s economic recovery.

The government is likely to submit a supplementary budget plan to an extraordinary Diet session expected to be convened this autumn. It will likely consider issuing additional government bonds to finance projects amid a lack of sufficient fiscal resources.

Some lawmakers in the ruling Liberal Democratic Party have demanded the size of the stimulus package exceed 10 trillion yen ($97 billion).

The latest stimulus measures would come at a time when Japan has yet to emerge from two decades of deflation despite the Bank of Japan’s large-scale monetary easing steps.

In addition to slowing Chinese and other emerging economies, Britain’s decision to leave the European Union has added some uncertainty to the prospects for the global economy.

With the economic steps, the government plans to build infrastructure nationwide to boost agricultural exports and facilities such as ports to attract foreign tourists to rural areas.

By utilizing the “zaito” loan program designed to lend public money to the private sector at low interest rates, the government will help accelerate the extension of a magnetically levitated train line from Tokyo to Osaka.

via Mainichi

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza