Why Japan’s economic plans are sending jitters through global markets

Al JazeeraCenterEN 5 min read 100% complete by John PowerJanuary 27, 2026 at 03:03 PM

AI Summary

long article 5 min

Japanese Prime Minister Sanae Takaichi's economic pledges, made ahead of snap elections in February 2026, have triggered volatility in global markets. Takaichi proposed suspending the consumption tax on food and non-alcoholic beverages for two years if her Liberal Democratic Party wins. This plan would create an estimated revenue shortfall of 5 trillion yen ($31.71bn) annually. The announcement caused Japanese government bond yields to soar, reflecting concerns about Japan's high debt levels. The market turmoil extends beyond Japan, highlighting broader fiscal sustainability worries as major economies run large deficits. Takaichi plans to offset the shortfall by reviewing expenditures and tax breaks.

Key Entities & Roles

Key Player Opposition Context

Ukraine 30% South Korea 30% Hamas 30% Gaza 30% Russia 30% United States 40% Shinzo Abe 50% Liberal Democratic Party 70% Sanae Takaichi ×790% Japan ×5100%

Keywords

consumption tax 90% sanae takaichi 80% bond markets 80% market turmoil 70% economic plans 70% fiscal sustainability 60% government bonds 60% snap elections 60% economic stimulus 50% debt levels 50%