Japan Acts to Spur Growth, Resolve Disputes on Trade

The Japanese government today approved a $41-billion package of emergency measures aimed at spurring economic growth and resolving disputes with the United States and other nations over Japan’s huge trade surplus.

Cabinet ministers at a morning meeting approved the package, which includes public spending worth about 5 trillion yen ($34.84 billion) and tax cuts amounting to 1 trillion yen ($6.97 billion).

The measures are designed to meet “an urgent need . . . to make a strong effort to vigorously expand the economy centering on domestic demand and to work to rectify its external imbalances and to structure its external relations more harmoniously,” said a provisional translation of a government statement concerning the package.

With the move, the government is hoping to attain the 3.5% inflation-adjusted economic growth goal it set for the fiscal 1987 year that began in April.

Japan has long been under pressure to expand its domestic demand, increase imports and cut its trade surplus, which reached a record $101.4 billion in fiscal 1986.

The yen’s sharp upturn has slowed exports by making Japanese products more expensive in overseas markets, forcing foreign manufacturers to slash production and investment and lay off thousands of workers.

The government revised its fiscal 1986 growth target down to 3% from 4% due to the impact of the yen’s appreciation.

The package is in keeping with the government’s efforts to restructure Japan’s export-dependent economy, a major reason for its big trade surpluses.

To raise funds for projects in the package, the government plans to draft a supplementary budget and introduce it into the Parliament this summer.

Foreign Purchases

The package includes about 1 billion yen ($6.97 million) in budget provisions for purchases of foreign goods.

It also includes public works projects worth 2.45 trillion yen ($1.71 billion), and disaster relief and other projects, including those to be funded by local public organizations, amounting to more than 2 trillion yen ($1.39 billion), the government statement said.

Spending for the package will be accelerated with more than 80% of the total to be spent in the first half of fiscal 1987, from April until October, the statement said.

The measures also include income tax cuts worth at least 1 trillion yen ($6.97 billion) in fiscal 1987 as part of a government effort to stimulate personal spending.