Japan Approves 21.3 Trillion Yen Stimulus Package

Japan's Cabinet approved a 21.3 trillion yen stimulus package on Friday, marking the largest economic boost since the COVID-19 pandemic and underscoring Prime Minister Sanae Takaichi's commitment to expansionary fiscal policy amid rising inflation and a recent economic slowdown.

The package, equivalent to about $135 billion, allocates 17.7 trillion yen for general government spending, a significant increase from the 13.9 trillion yen in the previous year's program. It also includes 2.7 trillion yen in tax cuts and 900 billion yen in special account outlays. When factoring in leveraged private-sector investments spurred by the measures, the total impact swells to 42.8 trillion yen. Officials described the initiative as a response to persistent inflationary pressures burdening households and businesses, aiming to curb rising living costs and stimulate consumption. Key provisions include 20,000 yen payments per child to families, income tax reductions, and a temporary cut to the gasoline tax rate.

The approval comes at a critical juncture for Japan's economy, which contracted by 1.8 percent annualized in the third quarter of 2025, ending a six-quarter streak of growth. The...