World Business Report Can Japan afford its billion dollar economic package?
Nov 21, 2025
Neil Newman, Head of Strategy at Astra's Advisory Japan, sheds light on Japan's ambitious $135 billion stimulus package aimed at uplifting wages and easing living costs. He discusses the potential impact on inflation and the importance of BOJ policy. Christy Guevara, an Associate Professor at the Nissan Institute, shares insights on public reaction, debt risks, and the implications for Japan's relationship with China, emphasizing how strained ties could affect tourism and exports. Together, they explore whether Japan can truly afford this economic gamble.
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Stimulus Targets Living Costs Not Just Growth
- Japan's $135 billion stimulus targets household bills, energy costs and small businesses to spur consumption.
- Neil Newman believes it may not stoke inflation and could even have short-term disinflationary effects.
Yen Strength Is Key To Long-Term Inflation Control
- Newman says longer-term price stability depends on a stronger yen and BOJ rate hikes.
- He expects a combination of Bank of Japan tightening and US Fed easing to restore currency balance.
Stimulus Is As Much Political Signal As Policy
- Christy Guevara explains the package aims to show the government is addressing everyday pains like food and energy costs.
- The policy is partly political: it seeks to reassure citizens worried about inflation and the weak yen.