Japan's govt set to pass record economic stimulus package

Japanese Prime Minister Fumio Kishida's government is set to approve a record economic stimulus package worth 55.7 trillion yen (S$662 billion), reports said yesterday, as the country prepares for a possible sixth wave of Covid-19 infections.

The measure, which may be approved as soon as today, includes spending to beef up the response to Covid-19.

The overall cost of the package, including private-sector funding, will come up to 78.9 trillion yen.

Some 500 billion yen will be allocated to measures like vaccine development, while front-line medical workers, nurses, nursery and kindergarten teachers as well as welfare workers can expect a pay rise of up to 12,000 yen a month.

Mr Kishida will also spend more to increase hospital bed numbers, expand the availability of polymerase chain reaction tests and ensure the smooth delivery of vaccines and booster shots, which are free to all residents in Japan.

The package reflects the new prime minister's aim to implement his much-vaunted plan to create a "new style of Japanese capitalism" while managing Covid-19 risks.

Its size is nearly double the 30 trillion yen that Mr Kishida promised over the past two months - first during his bid to be leader of the ruling Liberal Democratic Party (LDP) and then in a Lower House election.

The plan will pile on the fiscal pressure in Japan, which already has the worst debt-to-gross domestic product ratio among advanced economies. Top Finance Ministry bureaucrat Koji Yano had, last month, in an unusually outspoken commentary, slammed politicians for spending as if Japan's coffers were a bottomless pit.

Still, part of the package is targeted at areas where the country's Covid-19 response has been found wanting in previous waves that led to prolonged and repeated declarations of a state of emergency.

It comes amid a lull in cases, with 163 reported nationwide yesterday. Tokyo, the bustling capital with 14 million people, recorded just 20 infections in what was the 33rd straight day of fewer than 50 cases daily.

By comparison, Japan hit a one-day high of 25,992 cases on Aug 20, while Tokyo set a daily peak of 5,908 cases on Aug 13. That experience - which saw doctors stretched to the point where Covid-19 patients were left to die at home - has given Mr Kishida cause to beef up the healthcare system.

Still, the abrupt turnaround in the Covid-19 situation has left experts flummoxed.

One theory making the rounds, ironically, attributes the drop in cases to Japan's belated start of its vaccination drive which began only in February. The campaign picked up speed around July, and research has shown that vaccines have an efficacy period of six to eight months.

Some 75.7 per cent of the population has had two doses as at yesterday, with 91.2 per cent of seniors aged 65 and above fully vaccinated.

Japan has not begun administering booster shots, which will be made available for free to the public up to eight months after their second jab.

Meanwhile, an artificial intelligence system developed by Dr Akimasa Hirata from the Nagoya Institute of Technology has predicted that a sixth Covid-19 wave may hit around late-January.

In an effort to stave off that prospect, Mr Kishida is also acting to expand free polymerase chain reaction (PCR) testing, which thus far has been made available only to symptomatic patients.