Marketplace All-in-One Japan borrows heavily to stimulate its economy
Nov 21, 2025
Davina Gupta, a BBC correspondent with expertise in Japanese affairs, breaks down Japan's staggering $130 billion stimulus package approved by Prime Minister Sanae Takaichi. She discusses how this plan aims to alleviate household burdens through energy subsidies and cash handouts amidst rising inflation and public discontent. Gupta also highlights the contentious decision to increase defense spending to 2% of GDP, emphasizing the geopolitical strains with China. The conversation wraps with concerns about the economic implications of Japan's growing debt and market reactions.
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Stimulus Focuses On Household Relief
- Japan's stimulus directs large funds to household relief like energy subsidies and child cash handouts.
- The package aims to ease everyday costs while addressing public frustration over persistent inflation.
Persistent Inflation Is Politically Costly
- Inflation in Japan has run above the Bank of Japan's 2% target for 43 months, the longest since 1992.
- That sustained rise has become a major political frustration and a driver for policy action.
Defense Spending Accelerated
- The package includes a faster ramp-up in defense spending to 2% of GDP, moved up by two years.
- This shift responds partly to diplomatic pressure and regional security concerns.