Japan Approves a Massive 17 Trillion Yen Stimulus Plan – Simplified Version
Japan: A Yen-Fueled Stimulus, but an Economy Running Out of Workers
Burdened by massive debt and a fragile economic climate, Prime Minister Sanae Takaichi is taking aggressive measures to revive Japan’s economy. The government has announced a stimulus package exceeding $110 billion, supported by a 14-trillion-yen supplementary budget. The goal is to ease soaring prices and stabilize an economy that’s losing momentum.
But Japan’s core problem runs deeper: the country is running out of workers.
In 2024 alone, 309 companies went bankrupt due to labor shortages. The economic loss is huge—16 trillion yen per year, equal to 2.6% of GDP disappearing. Hotels, restaurants, nursing homes… all are struggling to operate.
Makoto Ono, who manages a hotel in Nikko, lost 40% of his staff since the pandemic. As a result, half the rooms stay empty even during peak tourism season. Without enough workers, even massive stimulus plans can’t restart economic activity—or support digital transformation initiatives.
AI in the Land of Robots: Real Solution or Digital Mirage?
To counter the labor shortage, the Japanese government is placing big bets on technology and artificial intelligence (AI). A key pillar of the stimulus is a long-term investment plan of 10 trillion yen by 2030 in AI and semiconductors—critical foundations for digital infrastructure, blockchain innovation, and future crypto-related technologies.
The objective: boost productivity to make up for the shrinking workforce.
But the reality on the ground is far less promising.
In the hotel sector, for example, companies invest only 20,000 yen per employee in software—twenty times lower than the national average. A surprising contrast for a nation famous for robotics, yet slow to automate the sectors most in need of digital support.
Some companies even choose to suspend operations temporarily rather than hire additional workers. A notable case is Co-op Deli in Saitama, which halted deliveries for five days this summer due to extreme heat and too few delivery drivers. Hiring temporary workers would have cost even more.
Technological stimulus sounds appealing—and could open doors for broader AI integration, digitalization, and eventually blockchain or crypto use cases. But without large-scale modernization for SMEs and workforce training, AI risks becoming an attractive showcase with no real engine behind it.
An Economy Stuck: Slow Growth, High Debt, and Declining Business Confidence
Behind the massive stimulus figures lies a deeper economic anxiety: businesses are losing confidence.
Since 2019, major corporations have failed to execute 10% of their planned investments. In 2024 alone, 1.9 trillion yen worth of projects were abandoned due to high risk and low visibility.
Even major players like TOC are freezing development. In Tokyo, a 13-story building scheduled for demolition to make way for a more profitable tower has had its redevelopment pushed back to 2036, mainly due to surging labor costs.
These delays show how deeply Japan’s economy is stuck—slow growth, shrinking workforce, hesitant investment, and a digital transformation that’s moving far too slowly to support emerging technologies like AI, blockchain, and crypto.
