Japan’s economy: Pump-priming

IF YOUR first shots miss the target, keep firing. That seems to be the lesson in Japan, where the cabinet of Shinzo Abe, the prime minister, approved an emergency stimulus package worth ¥3.5 trillion ($29.1 billion) on December 27th to pep up the recession-hit economy. Yet what stood out was the diminished heft of the package. Nearly two years ago the first of three “arrows”, as the various parts of Mr Abe’s programme have been dubbed, was a fiscal boost of ¥10.3 trillion, followed by another spending package worth ¥5.5 trillion in April 2014. The other facets of “Abenomics” will now have to be exploited.The government hopes that its meagre package will boost Japan’s real GDP by as much as 0.7% in 2015-16. Although more modest, the stimulus is more finely targeted this time, notes Robert Feldman of Morgan Stanley, an investment bank. A third of the total is to go on helping small businesses and households particularly hard hit by the effects of a weak yen and a squeeze in real incomes, both side-effects of Abenomics itself. Measures will include handing out shopping vouchers to the poor and subsidies for heating oil.Another of Mr Abe’s aims is to spread the…

Link to article: www.economist.com/news/finance-and-economics/21637410-shinzo-abe-unleashes-small-stimulus-package-pump-priming?fsrc=rss%7Cfec

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