Japan OKs $135 billion stimulus package to help revive its sluggish
economy
[November 21, 2025] By
MARI YAMAGUCHI
TOKYO (AP) — Japan's Cabinet approved a 21.3 trillion yen ($135.4
billion) stimulus package Friday to help spur the economy through
expansionary government spending and to relieve the impact of higher
prices.
After taking office last month, Prime Minister Sanae Takaichi promised
to boost government spending despite concerns that such moves will delay
progress on trimming Japan’s national debt, which is about triple the
size of its economy.
Takaichi told reporters that the package aims to quickly deliver on her
promises.
“Through wise spending, we will change worries into hope and achieve a
strong economy,” she said.
“What we should do now is to strengthen the national power through
expansionary spending, through wise spending, and not to cause harm
through excessively contractionary policies,” she said.
The spending package far exceeds those of the pre-COVID-19 pandemic
years and is also meant partly to blunt the impact of higher U.S.
tariffs on Japanese exports to America under President Donald Trump.
Exports to the U.S. fell in October for the seventh straight month, the
government said Friday, though shipments to the rest of the world rose
3.7%, thanks partly to higher exports to the rest of Asia.
In recent days, investors have sold off Japanese government bonds,
pushing yields higher, while the yen has fallen to nearly its lowest
level this year.
Share prices have also taken a hit from renewed friction with China
after Takaichi made comments that angered Beijing, provoking retaliatory
moves including an advisory warning Chinese tourists and students
against going to Japan.
The benchmark Nikkei 225 index fell 2.4% on Friday, mainly due to heavy
selling of technology shares.
The lavish spending package approved Friday includes subsidies for
energy costs, a cut in the gasoline tax and other measures to help
consumers struggling with the rising cost of living. The government
reported Friday that core inflation excluding volatile food costs was 3%
in October, higher than the central bank's target of around 2%.
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Japan's Prime Minister Sanae Takaichi, center, arrives for a cabinet
meeting at her office in Tokyo Friday, Nov. 21, 2025. (Yuki
Sato/Kyodo News via AP)
 Specific subsidies include one-time
cash handouts of 20,000 yen (about $130) per child, which would
require about 400 billion yen ($2.6 billion) in government funding
and issuing rice vouchers or other coupons worth 3,000 yen (about
$20) per person, to be distributed by local authorities.
Takaichi’s government must compile a supplementary budget and gain
approval by the parliament by the end of this year to fund the
package. That's a major challenge for her ruling coalition, which
lacks a majority in both the Upper and Lower houses of the Diet.
Takaichi succeeded former Prime Minister Shigeru Ishiba, who was
virtually ousted by his rivals in the ruling party after losing
major elections due to voter dissatisfaction over his minority
government's slow response to soaring prices and lagging wages.
As Japan's first female prime minister, Takaichi has so far enjoyed
high levels of public support largely because of expectations she
might shake up Japan's gerontocratic politics. But since she has a
minority government, she needs cooperation with opposition parties
to get her supplementary budget and spending package passed.
Opposition lawmakers and experts have questioned whether the package
will be effective in attaining its aims. One of which is to slightly
lower consumer prices by cutting energy costs. Any impact on
inflation is expected to be transient since increased demand from
other stimulus would tend to push prices higher.
The package also is meant to raise Japan's gross domestic product by
24 trillion yen ($155 billion), or an annualized rate of 1.4%,
according to the Cabinet Office.
Japan's economy, the world's fourth largest, contracted at a 1.8%
annual pace in July-September.
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