Japan to Implement New Economic Policy Addressing High Inflation and Semiconductor Support

Prime Minister Kishida Emphasizes the Need for Economic Policy

Japan will introduce a new economic plan that includes measures to reduce the burden of electricity and gas bills in response to high inflation, while supporting domestic production of critical materials such as semiconductors.

On the 25th (local time), foreign media including Japan's Kyodo News, NHK, and Yomiuri Shimbun reported that Japanese Prime Minister Fumio Kishida emphasized the need for new economic policies at the Prime Minister's Office, stating, "We intend to appropriately return the fruits of growth to the people suffering from high inflation."

The Japanese government announced that it will employ various means to shift from a "lukewarm economy," characterized by stagnant economic growth for 30 years, to a "warm economy" with active investment and wage increases. The core of the economic policy consists of five pillars: ▲ measures against high inflation ▲ continuous wage increases and regional growth ▲ promotion of domestic investment ▲ countermeasures against population decline ▲ public reassurance and safety.

Japanese Prime Minister Fumio Kishida
[Photo by Yonhap News]

On the 26th, Prime Minister Kishida instructed ministers to formulate policies at the Cabinet meeting and will prepare a supplementary budget to implement the economic policies. The Japanese government plans to finalize related measures this week and introduce them next month.

The Yomiuri Shimbun pointed out that, amid rising energy prices due to high inflation, whether the subsidy system to reduce the burden of electricity, gas bills, and gasoline prices will be extended until next year is a key point to watch.

Regarding wage increases and investment expansion, new tax reduction measures are expected to be introduced to increase domestic production of critical materials such as semiconductors and batteries. The Japanese government has decided to consider including continuous wage increases as a condition for granting subsidies to companies related to productivity improvement.

To revive regional economies, efforts will be made to increase the number of foreign tourists visiting Japan and to expand exports of agricultural, forestry, and fishery products. To address population decline, the government plans to promote "digital administrative and fiscal reforms" to improve the efficiency of local government operations.