Japan's Takaichi Cabinet Launches $135bn Economic Stimulus Package

Japan’s Takaichi cabinet launched a ¥21.3 trillion ($135 billion) economic package on November 21, 2025, marking the nation’s largest post-pandemic stimulus effort [4][5]. The package includes three core components:

• Household Relief
  : ¥11.7 trillion allocated to child subsidies (¥20k per child), energy vouchers, and rice subsidies to ease inflation burdens [1][4]
• Strategic Growth
  : ¥7.2 trillion for investments in semiconductors, AI, shipbuilding, and space development [1][2]
• Defense & Diplomacy
  : ¥1.7 trillion to accelerate defense spending to 2% of GDP (two years ahead of schedule) [5]
  General account outlays total ¥17.7 trillion—¥4 trillion more than the previous year [4]. Public approval for the cabinet rose to 67.5% following the announcement [5], while bond yields climbed in response to increased fiscal stimulus signals [2].

1. Policy Alignment
   : The package integrates short-term voter priorities (inflation relief) with long-term strategic goals (global tech competition, regional security) [1][5]
2. Public Perception
   : High approval rates reflect effective alignment of policy measures with consumer needs [5]
3. Regional Security
   : Defense spending acceleration signals a proactive response to rising regional tensions [5]
4. Market Sensitivity
   : Bond yield movements indicate market concern over fiscal sustainability amid Japan’s high debt levels [2][0]

• Fiscal Sustainability
  : Japan’s elevated debt-to-GDP ratio raises long-term fiscal health concerns [0]
• Market Volatility
  : Increased fiscal expansion may lead to further bond yield fluctuations [2]
• Implementation Uncertainty
  : Exact allocation details for strategic investments remain unclear [1]

• Tech Sector Growth
  : Investments in semiconductors and AI present growth opportunities for related industries [1][2]
• Household Wellbeing
  : Energy and rice subsidies directly ease inflation burdens for consumers [1][4]
• Defense Capabilities
  : Accelerated spending enhances regional security posture [5]

• Package Size
  : ¥21.3 trillion ($135 billion) [1][2][3]
• Public Approval
  : 67.5% (up 8.8 points) [5]
• Missing Details
  : Exact investment allocations, GDP growth projections, funding sources (debt vs reserves), and long-term fiscal impact assessments
• Market Reaction
  : Bond yields climbed post-announcement [2]