Fiscal stimulus packages showing signs of starting to take effect

While it is too early to be confident in the timing of an economic recovery in Japan, there are at least some signs that the situation is improving significantly.

Fiscal stimulus packages, announced by the government, total around ¥15trn ($150bn). This is equivalent to 3% of GDP, which is not large relative to the scale of the decline in GDP forecast for this year. However, in addition to this, the financial authorities have extended billions of dollars in guarantees on bank lending to smaller companies, and conversations we have had recently with a range of banks indicate that this is working. Almost every bank that we have spoken to has been active in using these guarantees to expand their lending book, and has expressed the opinion that fina...