Japan Prime Minister Takaichi Sanae's Spending Plan Strains Bond Markets
· Business · Hindustan Times, The Economist
Prime Minister Takaichi Sanae has unveiled a growth strategy that includes ¥370 trillion in public and private investment across 17 sectors through early 2041. As part of this plan, the government has allowed ministries to submit multi-year budget requests, with initial asks for the next year reaching a record ¥143 trillion. This fiscal expansion has unsettled investors, causing yields on ten-year Japanese government bonds to exceed 3% for the first time in three decades. Takaichi, who assumed office in October 2025, describes her economic agenda as a departure from the market-focused policies of her predecessor, Abe Shinzo. The government's increased reliance on state-led investment marks a shift in Japan's economic management style.
Why it matters
The shift toward heavy state-led spending is creating fiscal uncertainty for global investors and driving up borrowing costs in Japan's bond market. This policy direction signals a potential move away from the market-friendly reforms that previously defined Japan's economic strategy.
Read the original report — Hindustan Times
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