Japan’s focus on defense spending casts doubt on growth

While the government adopted a fiscal 2023 budget bill with record general-account spending of some ¥114 trillion Friday, its contribution to a virtuous cycle of growth and distribution that Prime Minister Fumio Kishida is aiming for seems likely to be limited.

The record spending reflects a significant increase in defense outlays.

The government has estimated the country’s real gross domestic product growth in fiscal 2023, which ends in March 2024, at 1.5%. But whether such growth will be realized depends on corporate wage hikes and the inflation situation.

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