Japan’s New PM Takaichi Launches Economic Plan Focused on Inflation Relief and Strategic Investment
Tokyo, October 2025 — Japan’s new Prime Minister Sanae Takaichi, inaugurated as the country’s 104th leader on October 21, has made it clear that her government’s top priority is to combat inflation and protect household livelihoods.
At her first Cabinet meeting, Takaichi instructed ministers to draft an emergency economic package to address the rising cost of living. The package will focus on household support, energy and fuel cost relief, and measures to strengthen Japan’s long-term growth foundations.
Tackling Inflation and Supporting Households
In her inaugural press conference, Takaichi pledged to abolish the provisional gasoline tax “as swiftly as possible,” aiming to ease fuel prices for consumers and businesses.
The measure is expected to reduce gasoline costs by around ¥15 per liter but may result in a revenue shortfall of roughly ¥1.5 trillion per year — a gap the government will need to offset through fiscal or tax reform measures.
She also announced plans to raise the “¥1.03 million income threshold” for part-time workers, allowing more people — particularly women — to work longer hours without losing tax or social security benefits. The move is designed to boost disposable income and expand Japan’s labor supply.
Managing External Shocks: U.S. Tariffs and Global Risks
Takaichi emphasized that Japan will “take all possible measures to mitigate the impact of U.S. tariffs” on domestic industries. Her administration intends to bolster economic security through diversified supply chains and “friend-shoring” partnerships, ensuring that key sectors remain resilient amid trade tensions and geopolitical uncertainty.
“Crisis Management Investment”: Japan’s New Growth Engine
At the core of the administration’s growth strategy lies the concept of “Crisis Management Investment”, under which the government has identified 17 priority sectors for focused support. This initiative promotes strategic, pre-emptive public–private investment in areas critical to national and economic security — turning potential risks into drivers of innovation and growth.
According to Jiji Press and government briefings, the plan highlights five cross-cutting strategic investment areas:
AI, Semiconductors, and Advanced Materials – Strengthening domestic production and technological sovereignty.
Energy, Food, and Logistics Security – Supporting renewable energy, stable food supply, and resilient transport infrastructure.
Defense and Security Infrastructure – Expanding capabilities in cyber, space, and defense technologies.
National Infrastructure and Regional Revitalization – Modernizing transportation, communication, and disaster resilience across Japan.
Biotechnology and Healthcare – Encouraging innovation in life sciences and aging-related healthcare solutions.
These sectors are expected to receive targeted tax incentives, subsidies, and deregulation, signaling new opportunities for foreign technology partners and investors. A Japan Growth Strategy Council — comprising Cabinet ministers and external experts — will design concrete public–private investment schemes, with key measures to be incorporated into the upcoming comprehensive economic package and a full national growth strategy scheduled to be finalized by next summer.
Diplomatic Priorities and Economic Diplomacy
Takaichi is set to attend upcoming ASEAN and APEC summits, reaffirming Japan’s commitment to a Free and Open Indo-Pacific (FOIP).
An early summit with U.S. President Donald Trump is also being arranged, underscoring Tokyo’s focus on deepening security and economic ties with Washington.
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Source:
https://www.kantei.go.jp/jp/104/statement/2025/1021kaiken.html