Will Japanese Government Unroll More Fiscal Stimulus Measures?
A day after the BOJ elected to keep its monetary policy on hold, Japanese Finance Minister Taro Aso supported the decision by commenting that he was not taking no actions towards rolling out new stimulus measures to boost the economy. In its monetary policy meeting on Thursday, the BOJ kept its policy steady but tweaked its forward guidance on account of growing external risks.
Markets are anticipating Japanese PM Shinzo Abe to announce a special budget towards the end of 2019 to request more spending to offset any impact of the prolonged US-China trade war and the recent sales tax hike. Economists are forecasting that the government could set aside anywhere between $5-$30 billion towards rebuilding infrastructure and supporting the weakening economy.
If this happens, it would be the first stimulus package being announced in three years. However, any additional fiscal stimulus measures would push the already high levels of public debt to record levels. Public debt is already more than double the size of the Japanese economy – the highest levels among developed economies.
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