Japan announced fresh stimulus plans worth nearly $300 billion on Wednesday to pep up the economy after the coronavirus pandemic tipped the country into recession.
Consumer spending has slowed to a crawl despite Japan’s relatively low infection numbers and death toll from the disease outbreak, prompting the first economic downturn since 2015.
In response Prime Minister Shinzo Abe’s cabinet agreed to a second exceptional budget of 31.91 trillion yen ($296 billion), including subsidies for smaller businesses and cash handouts for medical workers.
The cash — to be raised by issuing bonds — will also be used to help finance rescue programmes and loans for struggling businesses worth 117 trillion yen.
Combined with an initial stimulus package enacted last month, Japan’s total measures amount to 230 trillion yen when loan schemes are taken into account.
“With this world’s biggest package equivalent to 40 percent of our GDP, we’ll protect the Japanese economy through this once-in-a-century crisis,” Abe said on Wednesday.
“It is of utmost importance that we deliver assistance to people in tough situations,” he said, urging MPs to pass the measures quickly through parliament.
Part of the stimulus package involves giving away 100,000 yen ($930) to every adult and child in the country.
Other rescue measures include subsidies to help small companies pay rent, grants to medical workers and grants to help drug and vaccine development.
“We should brace ourselves for a crisis more serious than the Lehman shock,” Finance Minister Taro Aso told reporters after the Cabinet approved the budget, referring to the collapse of the US investment bank that sparked the 2008 financial crisis.
“We’ll boldly increase public spending and revitalise the economy. We’ll protect jobs and businesses,” he said.
Japan has recorded 16,651 coronavirus infections and 858 deaths as of Tuesday — a fraction of the toll seen in other global hotspots.
But a spike in infections prompted Abe to declare a nationwide state of emergency, handing regional governors the power to ask people stay indoors and call for businesses to close.
He lifted the emergency declaration this week but said Wednesday it would take “quite a long time” for the country to fully return to normal.