Japan will seek to keep in step with the new U.S. administration under President-elect Joe Biden in taking fiscal stimulus steps to revive the pandemic-hit world economy, while watching whether Washington will seek to return to a Trans-Pacific free trade pact it quit three years ago, Japanese officials say.
The overall shape of Biden’s policies remains unclear, but it is hoped he will take a softer stance on trade than President Donald Trump, who has advocated protectionist measures.
On Tuesday, Prime Minister Yoshihide Suga instructed ministers to compile a third extra budget for the fiscal year through March and draw up a fresh economic stimulus package to help the economy rebound from the impact of the coronavirus. Some ruling camp lawmakers say the budget could total between ¥10 trillion ($95 billion) and ¥15 trillion.
The order came after market forecasts that Japan’s economy grew an annualized real 18.03% in the July-September period, in what would be a sharp rebound from a 28.1% contraction the previous quarter — the worst on record going back to 1955.
Government sources say the supplementary budget will likely fund an extension of the domestic Go To Travel subsidy campaign beyond late January to continue supporting the tourism sector, while spurring consumption and helping businesses secure employment.
In the United States, expectations for stimulus measures have been growing after Biden pledged during the election campaign to invest heavily to upgrade U.S. infrastructure and shift to a clean-energy economy. He has also rolled out a “Buy American” plan featuring spending on U.S.-made products and research.
For Japan, the world’s third-largest economy, trade negotiations with the United States remain a priority issue. In 2019, its U.S.-bound exports amounted to Â¥15.25 trillion, while imports came to Â¥8.64 trillion.
