In an attempt to kick-start the world’s third-largest economy, Japan’s cabinet approved an economic stimulus package worth more than 28 trillion yen on Tuesday. The country’s biggest stimulus package since the global financial crisis aims to raise gross domestic product by 1.3 percent. About 7.3 trillion yen will be allocated to national and local governments over the next two years.
The program involves spending on infrastructure projects and reconstruction of disaster zones, devastated by earthquake and tsunami in 2011. Economists believe that the stimulus package will have a modest impact on the country’s economic growth next year, reports The Wall Street Journal.
The latest package, which comes just days after the Bank of Japan eased its monetary policy, falls short of economists’ expectations, with some describing it as another disappointing misfiring of “Abenomics,” writes the BBC.
Despite a mix of extremely accommodative monetary policy, flexible spending and promises of structural reforms over the past three years, Japan’s economy has been dogged by weak consumption, writes CNBC. Prime Minister Shinzo Abe said the stimulus package emphasizes not just stimulating demand but achieving sustainable economic growth led by private sector.