Japan’s economy will remain on track as the government prepares a 5 trillion yen ($50.6 billion) stimulus package to offset the drag from a sales tax increase scheduled for next April, a Reuters poll showed.
Economists expect the majority of the stimulus package to be spent on infrastructure and tax breaks for the corporate sector, the poll conducted October 10-15 showed.
It also concluded that Prime Minister Shinzo Abe’s government should take additional steps to ease regulations and encourage new markets for goods and services to lift the country’s potential growth rate.
“Although details of some spending measures will be determined in December, we estimate these fiscal measures will largely offset the negative impact from the consumption tax hike,” Nomura Securities economists said in a note to clients.
“We expect the policy focus to shift to the growth strategy, which the government will start to enact in the next Diet (parliamentary) session that convened on 15 October.”
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