Japan aims $6.8T GDP by 2040, ¥370T investment

Prime Minister Sanae Takaichi has unveiled an ambitious long-term economic plan aiming to dramatically expand Japan's economy by 2040, marking a significant shift toward growth-focused fiscal policy. The blueprint, discussed in a Council on Economic and Fiscal Policy meeting on Tuesday, June 30, sets a target of growing Japan's nominal gross domestic product to nearly 1,100 trillion yen, approximately $6.8 trillion, by the fiscal year starting in April 2040.

Central to the plan is a combined public and private investment target exceeding 370 trillion yen, or about $2.3 trillion, to be channeled into 17 strategic sectors over the next 14 years. These sectors include artificial intelligence, semiconductors, biotechnology, defense, shipbuilding, and space exploration. The government aims to lift annual private-sector capital expenditure to around 230 trillion yen by fiscal 2040.

The strategy seeks to achieve sustained annual real economic growth exceeding 1% and nominal growth above 3% as early as possible, a notable increase from Japan's average real growth rate of 0.4% over the past five years. Prime Minister Takaichi framed the plan as a necessary break from decades of...