Japanese Prime Minister Sanae Takaichi has ordered a fresh package of economic measures aimed at easing the burden of inflation on households and companies.
Takaichi, who became Japan’s first female premier on Tuesday, did not specify the size of the package or indicate whether additional bond issuance would be needed to finance it. A supplementary budget will be compiled to finance the measures, according to an order from Takaichi to compile the package.
Details will follow, but the order suggests that the package will include subsidies for electricity and gas charges during the winter, along with regional grants to ease price pressures. It also encourages small and medium-sized businesses to raise wages and increase capital investment.
Photo: Eugene Hoshiko, AP/Bloomberg
“What we promised politically is that the extra budget would be sufficient in scale,” Japan’s newly appointed Minister of Finance Satsuki Katayama told reporters yesterday. “It’s not about whether it’s large-scale or not. The point is that it’s large enough to achieve the goals we just talked about,” she said.
Cash handouts, which failed to gain public support during the July national election campaign, are not mentioned in the order.
Takaichi has identified rising living costs as a top economic priority, reflecting public concern over inflation. The order suggests she’ll favor targeted steps over a large-scale spending plan.
“With the goal of building a strong Japanese economy, I will work closely with relevant ministers,” Japan’s Growth Strategy Minister Minoru Kiuchi told reporters yesterday, after being tasked with putting the package together. Kiuchi added that it is important to explore various options for funding sources.
While Takaichi is known for her past support of aggressive monetary and fiscal stimulus, she has tempered her stance more recently, pledging instead to pursue expansionary but responsible fiscal policies. She faces the challenge of supporting the economy while addressing concerns about Japan’s massive public debt, which has contributed to rising long-term bond yields.
Consumer inflation has remained at or above the Bank of Japan’s (BOJ) 2 percent target for more than three years. Meanwhile, the central bank has been raising interest rates gradually, pushing up borrowing costs for the government. On Tuesday, Takaichi said she hopes inflation will become demand-driven as wages rise, rather than the result of cost-push factors.
“It’s important for the BOJ and the government to move in tandem,” Kiuchi said. “It’s key that monetary policy is appropriately managed toward both strong economic growth and price stability.”
Katayama echoed Kiuchi on the BOJ’s policy path, while also expressing caution about the current weakness of the yen, which is inflating import costs and hitting households and businesses.
Two other key pillars of the upcoming package are strengthening economic security and defense. The order calls for investment in strategic sectors, including artificial intelligence and semiconductors, as well as enhancing supply chains for critical goods.
The package is also expected to include some responses to US tariff measures, including steps to implement an investment scheme announced earlier with Washington. Japan has pledged to invest US$550 billion in key US sectors in exchange for reduced tariffs as part of that deal. That investment vehicle is likely to be discussed when US President Donald Trump visit Japan next week.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
BUST FEARS: While a KMT legislator asked if an AI bubble could affect Taiwan, the DGBAS minister said the sector appears on track to continue growing The local property market has cooled down moderately following a series of credit control measures designed to contain speculation, the central bank said yesterday, while remaining tight-lipped about potential rule relaxations. Lawmakers in a meeting of the legislature’s Finance Committee voiced concerns to central bank officials that the credit control measures have adversely affected the government’s tax income and small and medium-sized property developers, with limited positive effects. Housing prices have been climbing since 2016, even when the central bank imposed its first set of control measures in 2020, Chinese Nationalist Party (KMT) Legislator Lo Ting-wei (羅廷瑋) said. “Since the second half of
AI BOOST: Next year, the cloud and networking product business is expected to remain a key revenue pillar for the company, Hon Hai chairman Young Liu said Manufacturing giant Hon Hai Precision Industry Co (鴻海精密) yesterday posted its best third-quarter profit in the company’s history, backed by strong demand for artificial intelligence (AI) servers. Net profit expanded 17 percent annually to NT$57.67 billion (US$1.86 billion) from NT$44.36 billion, the company said. On a quarterly basis, net profit soared 30 percent from NT$44.36 billion, it said. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said earnings per share expanded to NT$4.15 from NT$3.55 a year earlier and NT$3.19 in the second quarter. Gross margin improved to 6.35 percent,
RSS