Japan to unveil huge $266bn economic stimulus, say reports

Japan is planning to launch a massive economic stimulus package worth more than 28 trillion yen (US$266 billion), according to media reports.

Prime minister Shinzo Abe announced the programme in a speech in south-western Japan, giving few details except to say it would include about 13 trillion yen in fiscal measures including government spending, according to Jiji Press news agency.

More highlights of the package are expected next week when the cabinet is due to approve the measures.

But it is believed Abe will propose improved wages for childcare and elder care workers, the introduction of needs-based scholarships for college students and reduced employment time required to earn pensions.

There would also be money for infrastructure, such as expanding ports to accommodate larger ships and accelerating a decades-long high-speed maglev train project.

Abe promised a stimulus package – which earlier reports had varied at being worth 10 to 30 trillion yen – after Britain’s vote last month to quit the European Union sparked a rally in the yen that threatened the profits of Japan exporters.

Traders tend to buy Japan’s currency as a safe bet in times of turmoil or uncertainty, but it makes the country’s exporters less competitive overseas and takes a bite out of their bottom line.

The news comes as speculation mounts that the Bank of Japan will further ease monetary policy after a two-day meeting Friday.

Since taking the helm more than three years ago bank governor Haruhiko Kuroda has overseen a huge asset-buying plan that now stands at an unprecedented 80 trillion yen annually. The scheme is a cornerstone of Abe’s push to beat years of deflation and kickstart growth, dubbed Abenomics.

But while Kuroda has insisted the central bank’s target to reach 2% inflation is realistic, the BoJ has been forced to push back its timeline for meeting that goal several times.

The government and central bank have come under increasing pressure to do more for the economy as a string of weak readings and sagging business confidence highlight a long-running weakness.

The dollar jumped as high as 106.54 yen from around 105.01 yen in the morning, after Fuji Television flagged the stimulus on Wednesday afternoon.

The benchmark Nikkei stock average ended higher on Wednesday, lifted by reports of the stimulus. The Nikkei ended up 1.7% at 16,664.82. It had jumped as much as 2.7% to 16,821.43 in early afternoon trade.

AFP and Associated Press contributed to this report.