Japan’s PM, Sanae Takaichi, rolled out an ¥18.3 trillion supplementary budget in early December to jumpstart the economy. Despite the mega boost, the yen is wobbling, debt is piling up, and many wonder if bold spending will hit the mark. 💸
The Budget Blitz
On December 2, the Takaichi cabinet approved a draft 2025 fiscal year budget packed with relief measures: scrapping the provisional gasoline tax, expanding subsidies for electricity and gas, handing out rice vouchers, and boosting tax-free income thresholds. It’s a spending spree designed to ease the pain of rising prices.
Why Critics Are Worried
But big moves come with big risks. Japan’s debt-to-GDP ratio is near 240%, the highest among advanced economies. To cover ¥11.7 trillion of the new budget, the government plans to issue more bonds—piling on even more debt. On December 5, yields on 10-year government bonds jumped to 1.95%, a level not seen since 2007. ⚠️
The Economic Scoreboard
- GDP contracted an annualized 1.8% in Q3 2025.
- The yen slid to around ¥157 per dollar in late November.
- October’s core inflation hit 3.0% year on year.
- Real wages fell 0.1% in October.
Analysts argue that Takaichi’s approach echoes outdated “Abenomics” tactics. As Asahi Shimbun commentator Makoto Hara put it, this “Takaichinomics” feels like using last season’s playbook in a totally new game.
What’s Next?
With inflation still sticky and markets on edge, the Bank of Japan faces calls to raise interest rates, while Takaichi sticks to her calls for steady policy. For ordinary households, the relief measures offer a quick lifeline, but they may not be enough to curb climbing prices in 2026. 🎯
As Japan faces an economic crossroads, one thing is clear: bold budgets can only go so far without sustainable growth and wage gains. Will Takaichi’s big bet pay off? Stay tuned! 🎮
Reference(s):
Takaichi's bold fiscal push hard to resolve Japan's economic woes
cgtn.com
