Japanese Prime Minister Sanae Takaichi, following a decisive victory in early parliamentary elections, announced a radical shift in political and economic course. In her first address to the Diet, she declared a departure from the decade-long policy of budget austerity in favor of aggressive growth stimulation. The government's priorities will be investments in advanced technologies, such as artificial intelligence and semiconductors, and a rapid strengthening of the country's defense capabilities in the face of increasing pressure from China.

End of belt-tightening policy

Prime Minister Takaichi announces a departure from austerity in favor of record budget expenditures stimulating economic development.

Massive military buildup and army reform

Japan plans to revise its pacifist constitution and significantly increase its military potential in response to the threat from China.

Investments in high technology

The government's financial priority will be the semiconductor and artificial intelligence sectors, funded through multi-year budget frameworks.

Optimism in financial markets

Global investors, including the Apollo fund, see in the reforms a chance to definitively end Japan's thirty-year stagnation.

Prime Minister Sanae Takaichi inaugurated a new era in Japanese politics, declaring in parliament "pressing the growth button" with unprecedented force. Her administration intends to break with the paradigm of excessive savings, which, according to the new head of government, has hampered the country's development for the past thirty years. The government has already submitted a budget proposal for the 2026 fiscal year, envisaging record expenditures exceeding 122 trillion yen. These funds are to fuel key technological sectors and crisis management projects, aiming to make Japan a stronger and more resilient state against external shocks. In the security sphere, Takaichi has taken a hawkish stance, warning that the current geopolitical environment is the most difficult since the end of World War II. She announced a revision of the pacifist constitution and a thorough reform of defense strategy. While Foreign Minister Toshimitsu Motegi emphasizes the need to maintain communication channels with China, the government's overall message is clear: Japan must become a military power capable of deterring regional rivals. Simultaneously, Tokyo hopes to strengthen relations with Washington, reflected in positive assessments from President Donald Trump. Foreign investors, including Apollo Global Management CEO Marc Rowan, see in these changes an opportunity to finally break the stagnation of the so-called "lost decades." The new swagger of Japanese business, supported by reforms in corporate governance and openness to private capital, is attracting global market attention. Since the end of World War II, Japan has maintained a pacifist character as a state, and its 1947 constitution formally prohibits possessing armed forces with aggressive potential. „My government will end the long-standing practice of excessive fiscal austerity and insufficient investment in the future. We will push, push, and push the growth button.” — Sanae Takaichi Economists, however, point to the risks associated with such aggressive fiscal expansion in a country with the world's highest public debt-to-GDP ratio. Deflation, which plagued Japan for years, is giving way to moderate inflation, forcing the Bank of Japan to adjust its previous monetary policy. The Takaichi government must therefore balance the need to finance military buildup with maintaining market confidence in the Japanese currency and bonds.

Mentioned People

  • Sanae Takaichi — Prime Minister of Japan, initiator of radical economic and military reforms.
  • Marc Rowan — CEO of Apollo Global Management, optimistic about the future of the Japanese market.
  • To Lam — General Secretary of the Communist Party of Vietnam.