Japan Plans to Lift Emergency and Injects Additional $929 Billion Economic Package

Japan government under the leadership of Prime Minister, Shinzo Abe has decided to lift a state of emergency across the country including Tokyo and other remaining states that were still facing coronavirus lockdown and inject a fresh economic package worth 100 trillion yen ($929 billion). Japan-based newspaper, the Nikkei said on Monday that the additional package would consist mostly of financial aid programs for companies hit by the coronavirus pandemic.

End of Japan’s State of Emergency

The world’s third-largest economy has relaxed the virus impacted emergency in most parts of the country on May 14 since the virus cases declined but decided to continue restrictions in some virus-prone areas including Tokyo. Japan’s economy minister told reporters on Monday, May 25, 2020, about the news of lifting emergency from all remaining regions.

Yasutoshi Nishimura, Japan’s Minister of State for Economic and Fiscal Policy, said, “While the emergency state will be lifted, it is important to expand economic activity in stages as we establish a new way of living.” Nishimura has been leading the advisory panel that recommended by close monitoring of Tokyo, Kanagawa, and Hokkaido prefectures, where cases remained fluctuated and high.

The pandemic outbreak in Japan, which has so far infected nearly 17,000 people and taken 825 lives, has devastated the country’s economy and analysts put concerns that it has rolled into a recession. Due to these reasons, Abe’s popularity in Japan diminished and a newspaper poll conducted at the weekend showed Abe’s support rate at 29%, the lowest since he returned to power in late 2012, with a disapproval rate at 52%.

An Additional Economic Stimulus

As Nikkei reported, Abe’s government has considered issuing a fresh and additional economic package to support the country’s ailing economy on track since Japan is facing its deepest slump in postwar history. The latest package, to be funded by a second supplementary budget, would follow a record 117 trillion yen spending plan deployed last month. Combining the stimulus, the government has allotted total spending about 40% of Japan’s gross domestic product (GDP) in response to the pandemic.

The Nikkei said that the new package would include 60 trillion yen to expand loan programs that state-affiliated and private financial institutions offer to firms hit by virus while another 27 trillion yen would be set reserved for other aid including capital injections for ailing firms.

As analysts projected, Japan’s economy has slipped into recession in the last quarter and expected another 22% contraction in April-June. The pandemic has already forced the government to add to Japan’s huge debt pile, which is already twice the size of its economy, to pay for big spending plans.

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