Japanese markets and related exchange traded funds could continue to strengthen after the government announced a new multi-trillion yen stimulus package to help lift the economy out of a prolonged period of deflation.
Prime Minister Shinzo Abe’s administration Thursday unveiled a ¥5.5 trillion, or $54 billion, spending package to reduce the expected economic drag from an upcoming 3 percentage point sales tax increase in April, reports Takashi Mochizuki for the Wall Street Journal.
“With this package and other economy-supporting efforts, we can make sure we remain on track to exit deflation,” Abe said in the article.
The stimulus package is part of Abe’s three “arrows” used to fight deflation as part of the so-called Abenomics plan.
The government estimates that the measures will translate to an ¥18.6 trillion economic impact and lift GDP by one percentage point.
“The size of our package is large enough to override a drop in spending stemming from a rush in demand ahead of the tax hike, which economists say will be around ¥2 trillion,” Economy Minister Akira Amari said in October. “We won’t be wrong to make it too large.”