Japanese gov't to compile new stimulus measures as Brexit, demographic headwinds loom

Japanese Prime Minister Shinzo Abe on Monday said his government will start to compile new economic stimulus measures to support the nation's economy and bolster domestic demand, in the first economic policy move following his ruling Liberal Democratic Party-led bloc's sweeping upper house election victory a day earlier.

Speaking at a press conference at the LDP headquarters, Abe said that new measures would be implemented to spur domestic demand focusing on key growth areas.

"We will implement comprehensive and bold stimulus measures to firmly bolster domestic demand," Abe said, adding that provisions would be included in the new spending package to enhance infrastructure to increase agricultural exports and improve mechanisms for the government to hit its target of increasing tourism from overseas to 40 million visitors annually by 2020.

The Japanese leader also said that Sunday's upper house election win underscored the public's support for his "Abenomics" reboot and that measures taken by the government henceforth would also be geared up to fortify the nation against the expected economic fallout from Britain's recent vote to leave the European Union.

"We obtained a powerful public mandate to accelerate Abenomics," Abe, whose pre-upper house election campaign focused predominantly on the economy and noticeably avoided his contentious plans to amend the nation's constitution by way of national referendum, but are now in focus as the LDP-bloc and pro-reform parties hold sway in the upper caucus of Japan's parliament.

Abe has since the election victory reiterated his previous intentions to swiftly pursue dialogue on amending the Constitution in parliament ahead of his and the LDP's long-held plans to hold a national referendum on the thorny issue.

On the economic headwinds that may be caused by "Brexit" Abe said, "the global economy is facing various risks including Britain's decision to exit the European Union and a slowdown in emerging economies. As such we will take thorough measures so such risks will not negatively affect the Japanese economy."

Abe said that there was no time to celebrate his coalition's election victory and that he would instruct Economic Revitalization Minister Nobuteru Ishihara on Tuesday to begin compiling fresh stimulus measures that are hoped to help combat the huge demographic crisis facing the nation, including its rapidly graying society and slumping birthrate and the ballooning welfare costs involved.

There have been calls from within the LDP for the new stimulus package to exceed 10 trillion yen (98.21 billion U.S. dollars), but the government, facing the largest public debt in the industrialized world at more than twice the size of Japan's economy, will likely struggle to finance a package of this size, economists said Monday.

Along with an extra budget slated to be submitted to an extra ordinary diet session in autumn, the government will also have to pass a bill to once again delay a planned tax hike as the previous timing of the new levy would have likely plunged the nation's fragile economy into recession again. Endit