Japan’s ¥370tn Investment Push: A New Framework for Long-Term Growth

Research evidence excerpt

Japan’s ¥370tn Investment Push: A New Framework for Long-Term Growth

re spending and grants. Initial cluster plans are

expected from July 2026, with further expansion thereafter.

3. Introduction of the “Strong and Prosperous Japan” investment framework signals structural

budget reform.

Prioritization of growth investment: Resource allocation will be guided by growth contribution•

and the ability to crowd in private investment.

Removal of budget ceilings: Greater flexibility in budget requests beyond traditional caps.•

Shift to multi-year budgeting: Supplementary budgets will be limited to emergencies, with Aniket Shah, PhD * | Head of Sust. &• Transition Strategy

multi-year allocations enhancing visibility for corporates and local governments. +1 (212) 323-3976 | ashah14@jefferies.com

4. Domestic investment expansion positioned as the core lever to raise potential growth. Charles Boakye, CFA * | Sust. & Transition

Despite strong technology and productivity fundamentals, weak private capex has been a key Strategist

+1 (212) 336-6649 | cboakye@jefferies.com

structural constraint. The strategy shifts away from reliance on supplementary budgets toward

predictable multi-year funding frameworks. The use of “bridge bonds” will secure stable multi-year Yujin Kim * | Sust. & Transition Strategy

Associate

funding—particularly in economic security—decoupling long-term investment from annual budget +1 (212) 778-8314 | ykim4@jefferies.com

constraints. The framework aims to generate a virtuous cycle of supply expansion, wage growth,

Luke Sussams ^ | Sust. & Transition Strategist

and demand recovery. 44 (0)20 7548 4404 | lsussams@jefferies.com

5. Investment-led growth scenario: capex ~¥230tn ($1.4tn) and GDP ~¥1,100tn ($6.8tn) by Jacqueline Murdock ^ | Sust. & Transition

2040.