Japan Rates Topics: Outline of Public-Private Investment across 17 Sectors Begins to Take Shape

Research evidence excerpt

Japan Rates Topics: Outline of Public-Private Investment across 17 Sectors Begins to Take Shape

J P M O R G A N Global Markets Strategy

25 June 2026

Japan Rates Topics

Outline of Public–Private Investment across 17

Sectors Begins to Take Shape

Summary Japan Markets Research

Takafumi Yamawaki AC

• At the joint meeting of the Council on Economic and Fiscal Policy and the (81-3) 6736-1748

Japan Growth Strategy Council held yesterday, the Takaichi administration takafumi.yamawaki@jpmorgan.com

presented its policy direction for public–private investment. The government Hiroki Yagi AC

envisages total public–private investment exceeding JPY 370 trillion by (81-3) 6736-6783

hiroki.yagi@jpmorgan.com

FY2040, with the growth strategy centered on AI and semiconductors (JPY JPMorgan Securities Japan Co., Ltd.

186 trillion) and biotechnology (JPY 98 trillion).

• The framework is designed to use government spending as a catalyst to

encourage private investment, and the introduction of a new investment

framework under the “Strong and Prosperous Japan” policy from FY2027 is

under consideration, alongside potentially bold fiscal expansion.

• Funding is expected to be arranged through special accounts, with the use of

bridge bonds likely. If the public–private mix is similar to that of GX

investment, the government share would amount to approximately 15% of the

total. Assuming spending is distributed over time, this would imply an annual

scale of around JPY 4 trillion.

• However, the released materials include simulations assuming fiscal spending

of around JPY 10 trillion per year, suggesting that a scale closer to this level

cannot be ruled out. While the use of special accounts may preserve fiscal

discipline in form, a substantial increase in calendar-based JGB issuance from