Japanese lawmakers are considering new stimulus measures to tackle the economic fallout from the coronavirus pandemic, aiming to strengthen markets after the central bank’s greatest cash release since the global financial crisis in 2008.
The government will contemplate tax reductions and other measures to battle the damage from the pandemic, economy minister Yasutoshi Nishimura stated Tuesday.
With global stock markets suffering from the crisis, the Bank of Japan (BOJ) injected $30.272 billion into the financial system with an 84-day dollar funding operation, the most significant since December 2008.
A group of governing party lawmakers proposed last week that the government briefly remove Japan’s 10% sales tax and prepare a 30 trillion yen ($282 billion) additional funds for spending. Though extreme, the proposal highlights the seriousness of issues facing the world’s third-biggest economic.
Sales tax income was necessary to fund social welfare costs; however, the government should take all possible measures to strengthen the economy, Nishimura stated.
The government’s decision to implement a long-mooted increase in sales tax in October 2019 to 10% from 8% has been extensively blamed for hurting the world’s third-biggest economy, which contracted an annualized 7.1% in the fourth quarter of last year
Many analysts expect another shrink in the present quarter amid the virus pandemic, which might mean two consecutive quarters of negative growth – the technical definition of a recession.