Japan's 370 trillion‑yen growth strategy draws sharp criticism over feasibility

The Japanese government’s draft “Growth Strategy” proposes more than 370 trillion yen of public‑private investment across 62 sectors—including AI, semiconductors, defense, space and quantum technologies—aiming to raise nominal GDP to about 1,100 trillion yen by 2040 and lift private equipment investment to over 230 trillion yen annually.

Analysts argue the plan’s assumptions are unrealistic. Calculations show the projected 3 % nominal annual growth falls short of the 3.7 % needed to meet the 2040 GDP target, implying the forecast relies on “full‑effect” scenarios. Critics also note that most of the projected nominal growth would stem from inflation rather than real output, and that the fiscal multiplier assumed (3.5‑4.0) exceeds empirical estimates. The strategy appears to depend on sustained negative real interest rates—effectively an “inflation tax”—to reduce debt‑to‑GDP ratios, raising concerns about fiscal sustainability, currency depreciation and long‑term household wealth erosion.