Market news

1 June 2020

Japan parliament to debate second extra budget for pandemic relief next week

Reuters reports that Japan's government will submit to parliament early next week a second extra budget to fund a new $1.1 trillion stimulus package to cushion the economic blow from the coronavirus pandemic, Prime Minister Shinzo Abe said on Monday.

With ruling and opposition parties on board for big spending to combat the virus fallout, parliament is likely to approve the budget as early as next week.

The move would give Abe ammunition to inject another heavy dose of stimulus to an economy on the brink of deep recession as the pandemic hit global and domestic demand.

"We'd like to submit (the second extra budget) to parliament early next week," Abe said in a meeting with ruling party lawmakers. "We need to protect businesses and jobs."

Abe's cabinet approved last month the $1.1 trillion stimulus package that includes significant direct spending, having rolled out a package of a similar magnitude in April.

The extra budget needs to get approved by parliament for the stimulus package to take effect.

Notable in the new stimulus package is 10 trillion yen ($93 billion) in reserves set aside for "emergency" spending - more than 10-fold the usual amount - that the government can tap for additional needs that arise to battle the pandemic.

Just two months into the new fiscal year beginning in April, the government compiled two extra budgets worth a combined 58 trillion yen to combat the virus shock - about 10% of gross domestic product (GDP) and more than half the size of this year's annual state budget.

"It's clear the government focused on the size of stimulus this time," said Hiroshi Ugai, chief Japan economist at JPMorgan Securities, who says the two stimulus packages will boost Japan's real GDP this year by 3.2 percentage points.

"It also leaves Japan with an expanded fiscal deficit" that could draw market attention once the pandemic subsides, he said.

Some analysts say Japan may be forced to compile a third extra budget later this year to take into account an expected slump in tax revenues due to slumping corporate profits.

After years of heavy spending to stimulate a low-growth economy, Japan is saddled with a huge public debt that is twice the size of its economy and the biggest among major industrialised countries.

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2021 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location