Japan’s Cabinet approved billions of dollars of stimulus spending in a supplementary budget meant to perk up a faltering economic recovery and cushion the impact of a sales tax hike next April.
The 5.5 trillion yen (US $ 53 billion) in fresh stimulus approved today is aimed at creating at least 250,000 jobs and is heavily weighted toward construction projects. It also includes 600 billion yen ($ 5.8 billion) in payments to home buyers and one-time payments of 10,000 yen ($ 100) per child to low and middle-income families.
Prime Minister Shinzo Abe promised the extra stimulus to counter a 3 percentage point increase in sales tax to 8 per cent in April.
Parliamentary approval of the stimulus in early 2014 is expected since Abe’s Liberal Democratic Party and its coalition partners hold majorities in both houses.
Japan’s economy, the world’s third-largest, emerged from recession in late 2012, growing at a brisk 4.3 per cent pace in the first quarter of the year. However, the pace of expansion slowed to 1.1 per cent in the third quarter as corporate investment remained sluggish and exports were sapped by lacklustre growth in emerging economies.