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Japan releases another stimulus package

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
Although it is in recession, Japan releases another stimulus package.

After just getting out of the state of emergency a few days ago, Japan considers another stimulus package for fighting the effects of the pandemic. The new aid package is said to be worth $1.1 trillion (117.1 trillion yen), and will be partially funded by a second extra budget. Also, 31.9 trillion yen (approximately $296 billion) worth of government bonds will be issued. 

Alongside with the first one, the total amount spent to combat the virus is around $2.18 trillion (234 trillion yen), or 40% of the country's GDP. It will be close to the size of the US package - $2.3 trillion, the largest one ever on record.

If the initial aid package went to cash payouts to households, and measures to fix the pandemic damage, the second stimulus would be for medical spending, for paying the rent of the firms and helping the students who lost their jobs.

Prime Minister Abe said that 10 trillion yen ($93 billion) would be used only for emergency spending, while 33 trillion yen is for direct spending.  

Besides the second stimulus, the government is taking into consideration stimulus measures to boost the tourism industry, set to start in July. The “Go To Campaign” will have a budget of 1.7 trillion yen ($15.8 billion), and is meant to subsidize domestic travel and restaurants' coupons. They consider releasing vouchers for souvenir shops, meal tickets, and a price reduction for event tickets. The measures will be implemented by the number of tourists.

The market reacted to the news with Japan225 closing higher by 0.39%. 

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Sources: the-japan-news.com, Bloomberg.com, investing.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.