Japan’s latest fiscal boost is as much about securing the prime minister’s future as combating the economic damage from Covid-19.
Japan’s Prime Minister Yoshihide Suga is preparing a third extra budget to supplement two earlier packages worth about 11% of gross domestic product. Covid-19 infections are climbing, authorities are cracking down on social activity, and the spurt in growth last quarter — the most since the 1960s — appears to be dissipating. But the shot of fiscal caffeine announced Tuesday, which has an overall value of 73.6 trillion yen ($708 billion), is about more than keeping the economy ticking.
It’s about Suga’s political survival.
The premier needs his own mandate after taking the helm of the the ruling Liberal Democratic Party four months ago, when Shinzo Abe stepped down because of ill health. That means he needs to keep the economy nicely juiced until September, the likely date for a nationwide poll. Almost as soon as Suga was sworn in, top LDP figures mused about a snap election to lock in support. The prime minister prevaricated, which is a risky proposition during a pandemic. Now he’s hostage to events. Support for Suga’s cabinet skidded to 50.3%, according to a survey published on Sunday, compared with 63% the previous month.