Japan Unveils $110B Stimulus: Major Shift from Fiscal Restraint to Economic Expansion and National Security

Japan, under the new leadership of Prime Minister Sanae Takaichi, is preparing to introduce an ambitious $110 billion economic stimulus plan designed to boost growth,

by Nikkei and Reuters. The initiative, which the cabinet is expected to approve on November 21, features major tax reductions, subsidies for energy and fuel, and an increase in defense expenditures, highlighting a determined effort to counter economic stagnation and address rising geopolitical challenges.

Initially valued at 17 trillion yen (approximately $110 billion), the stimulus will be

totaling 14 trillion yen—surpassing last year’s figure. The Ministry of Finance is working out the specifics, with ongoing discussions among ruling coalition members likely to shape the final package. Notable measures include expanded income tax relief, , and direct financial support to local governments for food aid initiatives.

A draft version reviewed by Reuters highlights “decisive and targeted” investments in crisis response and growth industries such as AI, semiconductor manufacturing, and shipbuilding. The government also intends to support companies impacted by U.S. tariffs and further increase defense funding, consistent with Takaichi’s firm approach to regional security. Daiwa Securities analysts estimate the total outlay could climb to 20 trillion yen ($133 billion), illustrating the magnitude of fiscal intervention required to revive an economy still facing deflationary risks.

This announcement comes at a time of escalating tensions with China, which recently cautioned its citizens against traveling to Japan following Takaichi’s contentious statements regarding Taiwan. While the stimulus is primarily aimed at domestic recovery, it also marks a shift in Japan’s approach to economic and security matters, emphasizing greater resilience to external disruptions.

The extra budget, which will partially fund the stimulus, is scheduled for the current fiscal year, with spending likely to extend into 2026. The administration’s pledge to “spend boldly” signals a move away from austerity toward investment-driven growth strategies.