Japan

Intelligence for Better Decision Making

Local Governments Reject National Rice Coupon Initiative Amid Administrative and Economic Concerns

Dec. 9, 2025 | Governance & Law

Japan’s central government has allocated significant funds in its latest budget to help households cope with rising food prices.

**The Reiwa 7 supplemental budget sets aside 2 trillion yen for local support measures, including 400 billion yen to provide roughly 3,000 yen per person in relief.**
The government left the choice of distribution method to each municipality, suggesting either physical rice allocations or electronic rice coupons. Agriculture Minister Norikazu Suzuki has actively promoted the coupon scheme, gaining support from leaders of agricultural cooperatives.

**Despite ministerial backing, many local governments have opted out of the rice coupon initiative.**
They cite high issuance and mailing costs, administrative complexity, and concerns over their logistical capacity. Shizuoka Prefecture, Katano City, and Kitakyushu City instead favor options such as free school meal programs or direct cash payments. Officials note that after administrative deductions, the net value of a 500 yen coupon falls to about 440 yen, and additional postage and handling can push overhead above 20 percent.

**Issuing organizations—namely the National Federation of Agricultural Cooperative Associations (JA Zen-Noh) and the National Rice Retail Sales Mutual Aid Cooperative (Zenmeihan)—also face scrutiny over their ability to process large-scale orders on time.**
Municipal staff worry about managing coupon expiration dates, since all vouchers must be redeemed by the end of September 2026, which adds another layer of administrative burden.

**Inside the ruling Liberal Democratic Party, Suzuki’s rice policy has drawn criticism from its agricultural faction.**
Detractors accuse him of favoring particular groups and condemn his abrupt reversal of the previous administration’s policy to increase rice production. They argue that price-support measures should remain under the jurisdiction of local governments rather than be driven by the agriculture ministry.

**A recent survey of 28 Tokyo-area municipalities found that none have committed to distributing government-recommended rice coupons funded by the Priority Support Local Allocation Tax; most are either undecided or firmly opposed.**
Localities such as Edogawa Ward point to the administrative burdens—especially the complexities of mailing and meeting expedited distribution deadlines—as key obstacles.

**Several jurisdictions also question the program’s economic impact.**
They worry that coupons valid nationwide could be redeemed outside the issuing areas, diluting any local economic stimulus. Kawasaki City has warned that the initiative risks becoming a generalized benefit rather than focused relief. In light of these concerns, municipalities including Edogawa and Nakano Wards are exploring direct cash payments as a more flexible response to escalating living costs.

**Some experts suggest redirecting a portion of the rice coupon budget toward broader regional revitalization vouchers that could cover a wider array of food items beyond rice.**
Meanwhile, Taito Ward has emerged as an outlier by launching its own rice coupon distribution at an estimated cost of 240 million yen, illustrating the diverse approaches and financial commitments at the local level.

Japan Enters Contraction as Investment and Exports Weaken in Third Quarter

Dec. 9, 2025 | Macroeconomics & Growth

Japan’s economy slipped into contraction in the third quarter of 2025, driven by broad softness in investment, exports and public spending.

**In the July–September quarter, real GDP fell 0.6 percent from the previous quarter, equivalent to a 2.3 percent annualized decline.**
The revised estimate deepens the initial forecast of a 1.8 percent annualized drop and marks the first negative growth in six quarters, coming in below median private-sector projections. Analysts attribute the downward adjustment to weaker-than-expected activity across multiple investment categories.

**Corporate capital investment declined 0.2 percent quarter-on-quarter, reversing an initially reported 1.0 percent gain.**
Equipment investment swung from a 1.0 percent rise to a 0.2 percent contraction—the first drop in three quarters—and software spending growth was also trimmed. Housing investment fell 8.2 percent, less severe than the preliminary 9.4 percent decline, as tighter energy-efficiency standards and a post-rush demand slump weighed on construction.

**Private consumption edged up 0.2 percent, an improvement over the preliminary 0.1 percent gain, led by increased outlays on dining and food services.**
This marked the third straight quarter of moderate consumption growth, although overall private spending continued to face headwinds.

**Exports fell 1.2 percent, unchanged from earlier estimates, as US tariff hikes on automobiles and other goods dampened foreign sales.**
This represented the first export decline in two quarters. Revised data show private inventories subtracted 0.1 percentage point from GDP growth.

**In the public sector, government consumption growth was revised down to 0.2 percent from 0.5 percent, and public investment swung into a 1.1 percent contraction from a previously reported 0.1 percent increase.**
These downward revisions added further drag on aggregate output.

**The GDP deflator rose 3.4 percent year-on-year, up from an initial 2.8 percent, indicating stronger price pressures.**
After a quinquennial base revision, statisticians raised the quarter’s nominal GDP to about ¥665 trillion, with annualized real GDP now estimated at roughly ¥590 trillion, compared with the initial ¥561 trillion figure.

**The confirmed contraction supports Prime Minister Sanae Takaichi’s recently announced stimulus package, the largest new spending initiative since the pandemic.**
Persistent weakness in business capital outlays and the housing sector adds complexity to the Bank of Japan’s upcoming policy deliberations, though officials appear poised to maintain a gradual path of interest-rate increases.

Monitored Intelligence for Japan - Dec. 10, 2025

News
Media
428

Government
Releases
66

City/State
Releases
137

Embassy
Releases
0

Foreign
Service
Advisories
0

Academic/
Think
Tank
21

Podcasts
0

Videos
0

Social
Media
0

Business
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0

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官房長官「岩手県で停電800戸」青森に内閣府調査チームを派遣

Chief Cabinet Secretary: 800 Households Without Power in Iwate Prefecture, Cabinet Office Investigation Team Dispatched to Aomori

Nikkei | Local Language | News | Dec. 10, 2025 | Critical Infrastructure Failure

Chief Cabinet Secretary Minoru Kihara reported on the earthquake in Aomori Prefecture, which registered a seismic intensity of 6+. In response, a Cabinet Office investigation team of five members has been dispatched to Aomori to assess the damage and local response efforts. The situation at the Rokkasho nuclear facility is under confirmation, and a disaster response meeting with relevant ministries was scheduled for 3 a.m.

Damage from the earthquake includes fires and power outages primarily in Hachinohe City, with multiple emergency calls reported. Approximately 800 households in nearby Iwate Prefecture are also experiencing power outages. No information on water or communication outages was available. The public was advised to remain alert for potential aftershocks of similar intensity over the next week.

No abnormalities have been reported at the Higashidori and Onagawa nuclear power plants. Due to a tsunami warning, people were urged to evacuate immediately to higher ground or designated evacuation sites. Prime Minister Sanae Takaichi emphasized timely public information, rapid damage assessment, and close coordination with local governments to prioritize life-saving and rescue operations.

気象庁会見「最悪、東日本大震災のような地震」発生確率0・1％から1％へ上昇

Meteorological Agency Press Conference: Probability of Worst-Case Earthquake Like the 2011 Great East Japan Earthquake Rises from 0.1% to 1%

The Sankei News | Local Language | News | Dec. 10, 2025 | Natural Disasters

The Japan Meteorological Agency (JMA) and the Cabinet Office issued a "Hokkaido–Off Sanriku Subsequent Earthquake Advisory" for the first time following an earthquake off the coast of Aomori Prefecture on the night of December 8, 2025. The advisory warns of the increased possibility of a massive earthquake of magnitude 8 or greater occurring in the region from off Nemuro, Hokkaido, to off Sanriku within the next seven days.

JMA highlighted that the probability of such a large earthquake occurring has risen from the usual 0.01% (once in a thousand) to approximately 1% (once in a hundred) during this period. Historical examples cited include the 2011 Great East Japan Earthquake, where an M7.3 earthquake was followed two days later by an M9.0 quake, and a 1963 event off Etorofu Island involving an M7.0 followed 18 hours later by an M8.5 quake.

The government urges special preparedness measures, including keeping evacuation items near the bedside, carrying emergency kits at all times, and confirming evacuation routes and family contacts. The advisory is effective until midnight on December 16, 2025, with officials emphasizing that while a major earthquake is not certain, heightened caution is advised without interrupting normal socio-economic activities.

長期金利2％に迫る背景に日銀利上げ観測と財政悪化懸念住宅ローン固定に影響も

Long-term interest rates approach 2% amid Bank of Japan rate hike expectations and fiscal deterioration concerns, impacting fixed-rate home loans

The Sankei News | Local Language | News | Dec. 10, 2025 | UndeterminedEconomic Growth

Long-term interest rates in Japan have surged, with the yield on newly issued 10-year government bonds reaching 1.970%, the highest in eighteen and a half years, approaching the significant 2% mark. This increase is driven by expectations of further rate hikes by the Bank of Japan (BOJ) and concerns about increased government bond issuance linked to Prime Minister Sanae Takaichi’s “responsible proactive fiscal policy.”

BOJ Governor Kazuo Ueda indicated the possibility of a rate increase at the upcoming monetary policy meeting scheduled for December 18-19, potentially raising the policy rate to around 0.75%. This level nears the lower bound of the BOJ’s estimated neutral interest rate range of 1.0% to 2.5%. Ueda also expressed interest in narrowing the estimate range for the neutral rate to better justify future rate decisions. Economists suggest that raising the lower bound of the neutral rate could ease explanations for continued monetary tightening.

Fiscal concerns contribute to the bond sell-off, particularly following the submission of a supplementary budget bill for fiscal 2025 that includes ¥11.7 trillion in additional government bond issuance. Despite the Prime Minister’s assurances of maintaining market credibility by lowering the debt-to-GDP ratio, market apprehension remains.

Rising long-term rates reflect increased economic activity but pose risks. A sharp rise can lead to unrealized losses on financial institutions’ assets and increase fixed mortgage rates, burdening borrowers who take out or refinance fixed-rate loans. If rates hit 2%, it will be the first such occurrence since 2006, with experts indicating a continued upward trend in long-term rates.

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