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Having assumed office just weeks ago, Japan’s new prime minister Shinzo Abe isn’t taking time to let the paint dry.
Abe announced a new ¥10.3 trillion (about $116 billion) stimulus plan Friday, an effort to end deflation and boost growth in the country.
About ¥3.8 trillion will be used on disaster prevention and reconstruction, Bloomberg noted this morning. Another ¥3.1 trillion will go toward encouraging private investment and other measures.
The move will boost Japan’s GDP by two points while adding 600,000 jobs in the process. Japan’s central bank was previously modeling inflation of one point with no deadline in sight.
Abe’s announcement now puts more pressure on the central bank for further easing, as the government will now be able to say its doing what it can to bolster growth. Japan will put together a budget of about ¥13.1 trillion for the current fiscal year, after having reported a larger-than-expected account deficit in November. About ¥5 trillion yen will be raised in bond sales, while total debt issuance in fiscal 2013 will be about ¥8 trillion.
Japan’s short-term bond yields rallied while longer-term yields fell. The spread between 30-year and 5-year securities hit its widest point since March 2010, market data showed.
Currency moved off of 2010 lows to 88.92 yen per dollar.
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