Japan PM Ishiba Urges Cabinet to Develop Stimulus Package, Reports Reuters

By Makiko Yamazaki and Tim Kelly

TOKYO (Reuters) – Japanese Prime Minister Shigeru Ishiba officially directed his ministers on Friday to create a new economic package aimed at alleviating the financial strain on households caused by increasing living costs. This initiative reflects the new government’s primary objective of exiting the prolonged period of deflation.

Ishiba, who was previously regarded as a supporter of fiscal austerity, has shifted his focus ahead of the upcoming general election, emphasizing the need for the economy to fully recover from deflation, which has persisted for the last thirty years.

"It is essential to support those affected by rising costs until we establish a positive growth cycle characterized by wage increases outpacing inflation and stimulating capital investments," Ishiba stated in his address to parliament.

On Thursday, Ishiba informed his cabinet that a supplementary budget would be prepared to finance the package following the lower house elections scheduled for October 27.

The new economic package is expected to include financial support for low-income households as well as subsidies for local governments, according to Ishiba’s policy speech.

In addition to the economic package, Ishiba pledged to work towards increasing the minimum wage to 1,500 yen (approximately $10.24) per hour within this decade, up from the current rate of 1,055 yen.

He noted that while economic conditions have shown improvement and wages are finally beginning to increase after three decades of stagnation, "we’re still halfway towards an economy where people feel secure enough to spend."

On the diplomatic front, Ishiba committed to strengthening relations with like-minded countries, continuing the deeper security cooperation with neighboring South Korea that was pursued by his predecessor. He also expressed a willingness to collaborate with China where possible, while also addressing points of contention.

A recent poll conducted by Kyodo News indicated that Ishiba’s newly established cabinet garnered an approval rating of 50.7% shortly after its inauguration this week. In comparison, when his predecessor, Fumio Kishida, launched his cabinet three years ago, it had a higher approval rating of 55.7%.

However, Kishida’s approval dropped to 26.1% in August amid scandals involving slush funds that implicated the ruling Liberal Democratic Party and ultimately led to his resignation.