Current session of Japan’s Diet to end today
An extraordinary 100-day pandemic-oriented session of Japan’s parliament, the Diet, is set to end today.
Despite opposition demands for an extension to better prepare for additional COVID-19 waves, the governing Liberal Democratic Party has refused to prolong a session that has seen the enactment of two record-breaking supplementary budgets and the Bank of Japan’s controversial foray into negative interest rate territory. The overall projected cost of Japan’s COVID-19 countermeasures exceeds $1.86 trillion.
Despite the unprecedented emergency allocation, several weeks of initial inaction continue to take a toll on the Japanese economy. The cash handouts, employee adjustment assistance and corporate subsidies stipulated by the first package have been distributed to only a small percentage of intended recipients, and the passage of the secondary budget could further tighten the bottleneck.
Expect today’s conclusion to be followed by an easing of domestic travel restrictions later this week, intended to jumpstart the nation’s flagging tourism industry. The concurrent release of May trade data will likely show a continued export slump reflective of weak US auto sales. Expect further delays in aid distribution to constrain economic recovery in the short-term. Despite the enormity of the allocated amount, no particular use was specified in the recent secondary budget, increasing the likelihood that bureaucratic complications will hamstring the package’s rollout.
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