Japanese Prime Minister Shinzo Abe is doubling down on his stimulus measures with more than US$1 trillion of extra help to keep businesses and households afloat amid the COVID-19 recession, a document obtained by Bloomberg showed yesterday.
The ¥117 trillion (US$1.1 trillion) package includes financing help for struggling companies, subsidies to help firms pay rent, and several trillion yen for healthcare assistance and support for local economies, the document showed.
The spending is to be funded by a second supplementary budget of ¥31.9 trillion that breaks a record for extra budgeted spending set only last month, the document showed.
Photo: AFP
The latest aid was finalized after data last week confirmed Japan has sunk into a deep recession and polls show support for Abe’s Cabinet dropping to a record low over its handling of the outbreak.
While the government ended its nationwide state of emergency this week and new virus cases have tailed off, the economic outlook is still grim.
Analysts expect GDP to shrink by more than 20 percent this quarter and say the recovery could be slow, as exports, tourism and business investment struggle to rebound.
Abe on Monday had said Japan would weather the pandemic by mounting the world’s biggest stimulus response, promising new measures that would bring the government’s support for the economy to about 40 percent of GDP.
The document showed the new measures match the overall size of last month’s ¥117 trillion package, bringing the total to just under ¥234 trillion.
“These measures are designed to stop or alleviate the damage done by the pandemic on companies and individuals, not to boost growth. So even with this package, Japan’s pickup will be very gradual,” BNP Paribas SA economist Hiroshi Shiraishi said.
The government’s extra spending comes amid reassurances from the Bank of Japan (BOJ) it would not allow bond yields to rise.
In a rare joint statement last week, the government and the central bank pledged tight cooperation to get funds to struggling businesses and shield the economy from the virus’s fallout.
BOJ Governor Haruhiko Kuroda on Tuesday told parliament that the bank would buy more government debt if the yield curve needed to be lowered.
Japan would boost its debt issuance by ¥55 trillion to ¥60 trillion to fund the second extra budget and other loans and investment in the new stimulus package, a person familiar with the matter said.
That would bring the total bond issuance this fiscal year to more than ¥200 trillion, another bump from the ¥128.8 trillion planned in December last year.
Parliament is expected to pass the new spending before its current session is scheduled to end on June 17.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to