Why Japan’s supplementary budget flatters to deceive
Japan’s parliament has approved the latest supplementary budget, which includes the second-largest expenditure package in its history. But while the size of the budget has skyrocketed to cope with the effects of the pandemic, it’s not only the budget size that is key when assessing its impact on the economy.
What you will learn:
- Although the budget has expanded rapidly, slow deployment of the additional funding has increasingly become a drawback. Data for fiscal 2020 reveals that of the ¥176 trillion annual budget, ¥31 trillion was unspent.
- A closer look at specific measures in the supplementary budget also shows that any additional short-term boost to the economy will be limited.
- Half of the budget is compensation and support for damaged firms and households through cash benefits and grants. And while long-term growth measures are a sizeable chunk of the budget, their impact will only be felt over the long term.
Tags:
Related Services
Post
Finland’s growth forecast cut amid weak confidence and soaring inflation
We have lowered our 2022 GDP growth forecast for Finland to 1.5% from 1.7% last month, as weakening confidence further dampens the outlook. We expect inflation to peak higher with a greater passthrough to core prices, squeezing real incomes and denting consumption. Russia has accounted for almost 10% of Finland's goods trade, among the highest in Europe.
Find Out More
Post
Why we see eurozone inflation slowing sharply next year
We have revised our 2022 eurozone inflation forecasts sharply higher, to 6.0%, since the start of the Ukraine war, as energy and food prices began to soar and new supply bottlenecks emerged. That said, we still see inflation decelerating sharply to 1.3% in 2023, putting us below consensus. While we recognise significant risks to our views, inflation should slow to below 2% in H2 2023.
Find Out More