Japan allocates $19 billion to confront the repercussions of the Iran war economy

Today, Wednesday, the Japanese government approved a supplementary budget worth $19 billion with the aim of reducing the repercussions of the Iranian war on the local economy, in light of rising energy prices and increasing living pressures on families and companies.

Japanese Prime Minister Sanae Takaichi’s office announced on its website that the additional budget was “approved” during the government meeting, in a move aimed at alleviating the effects of the fluctuations witnessed in global energy markets since the outbreak of the war.

Government spokesman Minoru Kihara said in a press conference that the Cabinet has allocated 3.1135 trillion yen ($19 billion) for this budget.

He added: “In light of the ongoing uncertainty in the Middle East, we have drawn up this budget with the aim of minimizing risks.”

Kihara indicated that the government will continue to closely follow price developments, stressing that it will monitor future market trends “so that citizens’ daily lives and economic activity are not affected.”

Effects of war

Takaichi announced last month that the funds allocated in the additional budget would be used to mitigate the effects of rising gasoline, electricity and gas prices, which witnessed significant increases due to supply disruptions and rising global oil prices.

Government measures reflect the extent of the impact that the Iranian war had on the Japanese economy, as its repercussions extended to various industrial sectors. Last May, Calbi, the leading manufacturer of potato chips, replaced the colored containers of 14 products with gray containers, while local media attributed the move to a shortage of ink linked to supply chain disruptions resulting from the war in the Middle East.

Regarding energy security, Takaichi confirmed that the government expects to secure stable oil supplies until next spring, noting that alternative supplies of naphtha, an oil product widely used in the petrochemical and manufacturing industries, have recovered to more than 80% of their previous levels despite the turmoil taking place in the region.