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Japan eyes another big stimulus package before possible Sept poll

Please try another search Economy44 minutes ago (Jun 10, 2021 01:56AM ET) © Reuters. FILE PHOTO: Japan’s Prime Minister Yoshihide Suga speaks during a news conference after the government’s decision to exted a state of emergency amid coronavirus disease (COVID-19) pandemic, at the prime minister’s official residence in Tokyo, Japan May 28 By Leika Kihara…


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Economy44 minutes ago (Jun 10, 2021 01: 56AM ET)

Japan eyes another big stimulus package before possible Sept poll - Nikkei© Reuters. FILE PHOTO: Japan’s Prime Minister Yoshihide Suga speaks during a news conference after the government’s decision to exted a state of emergency amid coronavirus disorder (COVID-19) pandemic, in the prime minister’s official residence in Tokyo, Japan May 28

By Leika Kihara

TOKYO (Reuters) -Japanese Prime Minister Yoshihide Suga is very likely to compile another big economic stimulus package before calling a snap election in September, the newspaper said on Thursday, although many major economies have scaled back crisis-mode policies to fight the coronavirus.

Opposition parties have called for a bundle sized approximately 30 trillion yen ($274 billion), a proposition Suga brushed aside in a disagreement with their leaders on Wednesday.

While the Nikkei didn’t report the anticipated size of the package, some analysts place a ballpark figure of 20-30 trillion yen because it’d be sufficient to fill Japan’s output difference – or the estimated dimensions of slack in the economy.

“The output gap seems to be a benchmark when the government compiles a stimulus package, so the next one could be sized around 20-30 trillion yen or even bigger,” said Toru Suehiro, a senior economist at Daiwa Securities.

“But the immediate boost to growth may be limited, as most spending will be for safety nets and steps like digitalisation and green investment that take long for the effect to appear.”

Tokyo has deployed enormous stimulus packages totalling $3 trillion over the past year to fight the pandemic, further straining public financing by adding to the debt pile that’s the biggest among leading industrialised nations.

Suga has repeatedly brushed aside the chance of compiling another stimulus package anytime soon, asserting that the authorities still had money left over from a pool of reserves set aside to meet immediate financing needs to combat the pandemic.

With some lawmakers from within his own Liberal Democratic Party (LDP) calling for bigger spending, however, many analysts expect Suga to compile an excess funds to finance another stimulus package later this season.

The size and timing of this package will depend considerably on if Suga call a snap election, a choice complicated by low approval ratings for his handling of the pandemic as well as the Tokyo Olympic Games starting from July 23.

A lower house election has to be held around the time the incumbent lawmakers’ term end on Oct. 21. Suga must also win a ruling party leadership election when his term ends on Sept. 30.

($1 = 109. 5300 yen)

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