The measures include infrastructure spending and incentives for businesses to increase investment. The government said the effort could add 2% to the Japanese economy while creating 600,000 jobs.
Japan is currently in recession, having seen its economy contract for two successive quarters. The country has been hit by a fall in exports as the global economy continues to falter as well as weakened domestic demand.
Prime minister Shinzo Abe, who took office in December, said: “Unfortunately, the previous administration failed to work out how to boost growth and expand the economic pie. It is vital that we have an economic strategy that can create jobs and raise incomes to sustain growth.”
During his election campaign, Abe vowed to use aggressive measures to restore growth to the Japanese economy. This included promises to weaken the yen to help the country’s exporters and moves to make the Bank of Japan commit to a 2% inflation target.
Kohei Okazaki, an economist at Nomura Securities in Tokyo, told Bloomberg that the new stimulus package will “be a big lift for Japan’s economy”, adding: “It will put more pressure on the central bank for easing because the government can push out its chest and say that it’s doing what it can.”