Japan’s Prime Minister Shinzo Abe (R) and Finance Minister Taro Aso (2nd R) wearing face masks amid concerns over the spread of coronavirus (COVID-19) bow during a budget committee session in the lower house at parliament in Tokyo on June 10, 2020. – Japan’s powerful lower house approved an extra budget worth nearly $300 billion, doubling the scale of measures to pep up the economy after the coronavirus pandemic tipped the country into recession. (Photo by STR / JIJI PRESS / AFP) / Japan OUT
TOKYO — Japan’s powerful lower house of parliament approved an emergency budget worth nearly $300 billion Wednesday, doubling the scale of measures to pep up the world’s third-biggest economy after the coronavirus tipped it into recession.
Consumer spending has slowed to a crawl despite Japan’s relatively low infection numbers and death toll from the pandemic, prompting the first economic downturn since 2015.
In response, lawmakers approved a second exceptional budget of 31.91 trillion yen ($297 billion), including subsidies for smaller businesses and cash handouts for medical workers.
The budget bill will be sent to the upper house and is widely expected to be enacted as early as Friday.
The cash — to be raised by issuing bonds — will also be used to help finance rescue programs and loans for struggling businesses.
The government said the size of the package, including loans and investments in addition to actual fiscal spending, is worth about 117 trillion yen, nearly the same size as the first extra budget enacted on April 30.
Combined with that initial stimulus package, Japan’s total measures amount to 230 trillion yen when loan schemes are taken into account.
That is a whopping 40 percent of GDP — trumpeted by Prime Minister Shinzo Abe as the world’s biggest virus program — and pushes Japan’s debt-to-GDP ratio up to 257 percent, noted Naoya Oshikubo, a senior economist at SuMi TRUST.
“It will be worth it to drive the recovery,” said Oshikubo.
“The two supplementary budgets alone should push up real 2020 GDP by three points. In addition, the state of emergency has now ended across Japan and the economy is set to improve,” added the economist.
Rescue measures include subsidies to help small companies pay rent, subsidies for companies paying leave allowances to their employees, grants to medical workers, and grants to help drug and vaccine development.
Japan had recorded 17,251 coronavirus infections and 919 deaths as of Tuesday — a fraction of the toll seen in global hotspots.
But a spike in infections prompted Abe to declare a nationwide state of emergency, handing regional governors the power to ask people to stay indoors and call for businesses to close.
He lifted the emergency declaration last month but said it would take “quite a long time” for the country to fully return to normal.
The first extra budget that passed on April 30 included cash handouts for every resident and money to help boost the production of much-needed masks for medical workers.