Takaichi Convenes Joint Economic and Growth Strategy Meeting

On July 21, 2026, Prime Minister Takaichi held a joint meeting of the 11th Economic and Fiscal Policy Council and the 7th Japan Growth Strategy Council. The meeting discussed the draft Japan Growth Strategy and the draft Basic Policy on Economic and Fiscal Management and Reform 2026, and finalized the Japan Growth Strategy and the Basic Policy. It also received a report on the Regional Future Strategy. The subtitle of the Basic Policy is “The First Year of Responsible Proactive Fiscal Policy: Launching Japan’s Challenge.”

The government said Japan’s potential growth rate is sluggish compared with major advanced economies, while figures representing technological innovation capacity and labor productivity are comparable to those of other countries, and domestic investment is insufficient. It will break with excessive austerity and insufficient investment in the future, and bolster domestic investment.

The policy aims to strengthen supply capacity through public-private investment, increase employment and income, improve consumer sentiment, raise business earnings, and create a virtuous cycle in which tax revenue naturally grows without raising tax rates as GDP expands.

In regional areas, the government will provide hands-on support under multi-year plans and seek broad-based, high-quality industrial clusters spanning supply chains through talent development ecosystems.

The government will place a stable decline in the debt-to-GDP ratio at the core of its fiscal management targets and ensure fiscal sustainability while taking market confidence into account. It says it will secure market confidence through transparent and consistent explanations to the public and domestic and international market participants.

The government selected 17 fields from crisis management investment and growth investment, and developed public-private investment roadmaps after 186 cumulative participants, including academics and business representatives, held 54 rounds of discussions. It cited expanded mass production of semiconductors and games as near-term revenue sources; physical AI and plant factories as the next major earners; and quantum technology and fusion as emerging growth areas to begin with research and development support. Products and technologies were narrowed down based on risk reduction, the potential to capture overseas markets, and the international advantage of related technologies.

The Regional Future Strategy will proceed through three types of plans: the Strategic Industrial Cluster Plan, the Regional Industrial Cluster Plan, and the Local Industry Growth Plan. The first will begin with large-scale investment by companies related to the 17 strategic fields, with national regional agencies and local governments working together to develop wide-area plans. The latter two will be plans by prefectures and municipalities to use and develop regional resources. The government will take measures addressing eight cross-cutting issues, including talent development, cybersecurity, and startups.

The government will create a “Strong and Prosperous Japan” Investment Framework separate from ordinary expenditures, with no ceiling on requests and requests based in principle on multi-year plans. During the budget formulation process toward year-end, it will compile a multi-year Japan Growth Strategy Implementation Plan incorporating investment project plans and major budget programs. Each minister in charge will propose measures for the implementation plan from the initial budget request stage, while the Regional Future Strategy budget package will specify infrastructure development, private investment support, talent development, and other measures.

The medium- to long-term economic and fiscal plan covers through fiscal 2040, aiming for domestic private capital investment of 250 trillion yen and GDP approaching 1,100 trillion yen in that fiscal year. It also sets a goal of establishing and raising growth to above 1% in real terms and above 3% in nominal terms as early as possible. A stable decline in the debt-to-GDP ratio will be central to fiscal management targets, with details such as full-year government bond issuance to be specified.

The government said it kept post-supplementary-budget government bond issuance in fiscal 2025 at or below the previous fiscal year’s level. In the fiscal 2026 budget, it kept new government bond issuance in the general account below 30 trillion yen for the second consecutive year, and said it responded to the June supplementary budget without increasing government bond issuance in the market. It designated fiscal 2027 as the “First Year of Responsible Proactive Fiscal Policy” and will reflect budget formulation reforms in next year’s budget.