His comments came as Takaichi seeks to put Japan’s economy on track for faster growth
Published Thu, Aug 6, 2026 · 11:08 AM
JOINT US-Japan intervention has supported the yen for now, but isn’t a game-changer for the currency or the economy, Japan’s former Prime Minister Fumio Kishida said, touting a 370 trillion yen (US$2.3 trillion) growth strategy as the long-term vision that will transform Japan’s fortunes.
“In terms of the currency, it could buy some time, but it could end up doing no more than that unless the fundamental economic situation and the broader environment changes,” Kishida said in an interview on Wednesday (Aug 5).
The US and Japan announced on Monday that they had stepped into the currency market on Friday to prop up the yen.
Kishida is chief of a ruling party group that provided advice to Prime Minister Sanae Takaichi on drawing up the 14-year growth strategy covering 17 strategic areas.
He brushed aside concerns over how it will be funded and pointed to Japan’s nascent semiconductor and AI industries as examples of how the economy could grow at an accelerated pace.
“The government should act as the catalyst. Using public funds as seed money, we should attract private-sector capital, including Japan’s 2,300 trillion yen in household financial assets, as well as substantial investment from overseas,” he said. “If we limit our thinking to the government’s own fiscal resources, then that’s the end of it.”
Conveying that big picture message to the markets will help to reassure investors as will increased communication between the government and the Bank of Japan that also shows the central bank’s independence, he said.
The comments come as Takaichi seeks to put Japan’s economy on track for faster growth with funding from the government despite simmering concerns over whether the nation’s finances are sustainable.
Even as Takaichi grapples with one of the biggest debt loads among the world’s largest economies, she is pushing through a plan to cut the sales tax on food and has been vocal about increasing defence spending.
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The details of how the plans will be funded remain hazy. Takaichi has promised there will be more clarity as she overhauls the budgetary process over the coming weeks. That’s left investors on edge.
Simplistically divided by the 14-year time frame, the ambitious growth plan aims to generate an annual average of more than 26 trillion yen in domestic investment. Even if Tokyo only provided a third of that investment, that would far exceed the annual burden of the sales tax cut.
Kishida said that the issue wasn’t about the numbers, but about confidence in the trajectory of Japan’s economy.
“Simply putting out a numerical target now will not immediately convince overseas investors or earn their confidence. What matters is presenting a clear long-term vision,” he said. “Once that is done, people can see how large the opportunity may become.”
Japan already has success stories of public- and private-sector cooperation in strategic industries, he said, citing factory construction by TSMC and Micron Technology Inc. as examples.
The growth strategy expands that thinking to other sectors, he added. The 17 designated strategic areas in the plan include AI, semiconductors, and other more niche industries such as content creation and food tech.
Japan’s Ministry of Economy, Trade and Industry has allocated up to 500 billion yen to help cover the cost as Micron expands its factory in western Japan. That sum is around a third of the overall cost of the project to produce advanced memory chips.
Under Takaichi, Japan’s industry ministry has nearly quadrupled its budgeted support for advanced semiconductors and artificial intelligence development to about 1.23 trillion yen for this fiscal year.
“I certainly don’t believe this is just a pipe dream,” Kishida said. “It will be important to carefully gauge how the international community responds to it and to move projects forward accordingly.”
Kishida also spoke of the importance of the government doing what must be done in terms of fiscal and monetary policy so as not to let the efforts of the historic Japan-US joint intervention go to waste.
Markets have interpreted Takaichi as pressuring the BOJ to take a more dovish stance on monetary policy, even as the central bank gradually proceeds with interest rate hikes under Governor Kazuo Ueda — the central bank chief handpicked by Kishida when he was premier.
“It’s important to reaffirm and communicate the basics — that monetary policy is decided by the BOJ alone and there is no intervention into that decision by the government,” Kishida said when asked to comment on whether the government would go along with a September or October rate hike.
Kishida hinted at the need for more communication not just between the leaders of the government and the central bank but also at the working level as a way to coordinate and communicate with markets better.
“The prime minister and the governor speak occasionally, but some people say there isn’t enough communication beyond that,” Kishida said. “Perhaps more communication there would be helpful. Then the markets might be more understanding.”
In his time as prime minister from 2021 to 2024, Kishida had to respond to a series of historic developments both domestically and globally. Russia invaded Ukraine, the Covid pandemic came to an end, and inflation hit Japan for the first time in decades.
As part of those shifts, Kishida formulated policies to urge households to invest instead of save, setting up a tax-free investment account mechanism that has seen almost 28 million new accounts opened as of the end of 2025.
There is talk of directly including government bonds as products eligible for the tax-free program, but Kishida sounded wary of a plan that would push assets seen as more as a safeguard.
“The core idea behind the government’s initiative to become an asset management nation is to channel household financial assets into risk-bearing investments such as equities,” he said. “In other words, the objective is to shift from savings to investment.” BLOOMBERG
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