Crisis Management for a Conflict with North Korea

Asahi Shimbun - E | English | News | Nov. 21, 2025 | UndeterminedEconomic Growth

The government is preparing an economic stimulus package exceeding 20 trillion yen ($128 billion), marking the largest post-COVID measure to date. Key components include major tax cuts such as raising the income tax threshold and abolishing the additional gasoline tax. Government spending is set to rise to around 17 trillion yen, significantly higher than last year's levels.

The package is shaped by advisory panels and ruling party lawmakers who supported a larger plan in line with Prime Minister Sanae Takaichi’s assertive fiscal policy. The government aims to finalize the framework within November and submit a supplementary budget bill for approval in the current Diet session, targeting passage by December. Last year’s supplementary budget involved 13.9 trillion yen in general account spending and 6.6 trillion yen in new government bonds.

Takaichi has instructed ministries to focus the package on three main pillars: inflation relief through local grants and subsidies for winter energy bills; crisis management and growth investment by supporting AI, semiconductors, and shipbuilding; and strengthening defense and diplomacy, including increased defense spending and aid for companies impacted by U.S. tariffs enacted under former President Donald Trump.

Supplementary budgets ranged from 1.6 trillion to 3.6 trillion yen between fiscal 2016 and 2019 but escalated sharply during the pandemic. Large-scale budgets have become standard, with 13.1 trillion yen allocated in fiscal 2023 under former Prime Minister Fumio Kishida and 13.9 trillion yen in fiscal 2024 under then-Prime Minister Shigeru Ishiba.