October 31, 2019 / 11:54 PM / a month ago

Japan finance minister Aso sees no need now for economic stimulus

FILE PHOTO: Japan's Finance Minister Taro Aso attends the G20 Finance and Central Bank Deputies Meeting in Tokyo, Japan January 17, 2019. REUTERS/Issei Kato

TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Friday he saw no need now to compile stimulus measures to prop up the economy, brushing aside a media report that the government was considering such a plan.

“I have not received instructions” from Prime Minister Shinzo Abe, Aso told reporters after a cabinet meeting. “I’m not considering anything that must be done now.”

Speculation is rife that Abe may ask for additional spending in an extra budget at the end of the year, as the longest postwar economic boom sputters amid the U.S.-China trade war and as the government watches the impact of a sales tax increase implemented on Oct. 1.

Yasunari Ueno, chief market economist at Mizuho Securities, says the government is likely to earmark $5 billion-$10 billion for infrastructure rebuilding, while longtime Japan strategist Jesper Koll forecasts something more like $20 billion-$30 billion.

The Nikkei business daily reported that Abe would soon instruct his cabinet to compile stimulus measures by earmarking an unspecified amount of spending in an extra budget for the current fiscal year and an annual budget for next fiscal year.

That would be the first stimulus package since 2016, with the aim of supporting disaster relief and reconstruction from typhoon Hagibis and boosting economic growth, Nikkei reported.

More spending would further strain the industrial world’s heaviest public debt burden, which is more than twice the size of Japan’s economy, and could jeopardise the government’s elusive goal of balancing a primary budget by fiscal 2025.

While facing the need to strike a balance between boosting growth and pushing fiscal consolidation, Abe’s government raised the national sales tax to 10% in a move meant to help restore dire public finances.

The Bank of Japan kept monetary policy steady on Thursday as expected but gave the strongest signal to date that it may cut interest rates in the near future, underscoring its concern that overseas risks could derail a fragile economic recovery.

Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher

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